Amid the continuing supply chain crisis in California, industry stakeholders joined lawmakers at a special meeting of the Ports and Goods Movement committee Wednesday to figure out practical ways to address regulations and investment to help accelerate operations.
It’s projected that the supply network issues could continue well into next year, Rachel Michelin, president and CEO of the California Retailers Association (CRA), told the Northern California Record.
“Obviously the supply chain and goods movement is a very challenging issue,” Michelin said. “There's a lot of moving parts to it, so I think it was a good first step for at least figuring out where we go from here.”
In addition to Michelin’s testimony, input at the hearing came from officials at the ports of Los Angeles and Long Beach and the California Trucking Association.
The most recent data showed 56 ships still waiting outside the Port of Los Angeles; figures were not immediately available for Long Beach.
As a stopgap measure, some larger retailers have been using planes or different vessels and ports to get their inventory on shelves, but most smaller businesses don’t have those options, Michelin said.
“Frankly we were hit hard last year, because we were at a 20% [in-store] capacity which had a huge impact on small retailers,” Michelin said. “And now it's kind of like wave number two, which is now they don't have the goods on their shelves that they need.”
Some economic forecasts say the clogged supply chains could persist until February, Fortune reported.
“I think we're going to see supply chain issues well into the new year,” Michelin said. “I don't know how long it will take; there's a lot of critical conversations that need to take place among the private sector and the public sector,” Michelin said. “One of the things we really asked – and I asked for this in my testimony – we really do need to start looking at all of the regulatory issues that businesses within the goods movement have to comply with.”
Michelin noted that new warehouse regulations have been passed, and a new law, AB 701, begins on Jan. 1. Next week new container dwell fees also go into effect.
“Here’s the challenge in California in particular, it's regulation after regulation, Michelin said. “And when you have a business and you want to invest in warehouses, part of our big problem is that we have a warehouse shortage, we don't have enough warehouse space.
“And so, when you make it so difficult, where there's that fear of how much is it really going to cost me – and what other regulations are going to come out, you know they passed the indirect source rule in Southern California on warehouses – that adds costs,” Michelin said. “And when you have AB 5, as an example, when it comes to the trucking shortage and the fact that people do want to be independent operators of their trucks – that's a choice that they made, and they should be able to make that choice – we really need to look at everything collectively.
“That doesn't mean you throw everything out, it doesn’t mean you throw out of all the environmental regulations, but I think it's always good, regardless, to take a step, look at these regulations, make sure they're still being effective,” Michelin said. “Make sure they're still accomplishing what they were supposed to accomplish, and not becoming a hindrance to the goods movement.”