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Harbor Trucking Association CEO on the supply chain backlogs

Matt Schrap, Harbor Trucking Association CEO, joined Yahoo Finance Live to discuss the supply chain backlogs and how it's impacting truckers.

Video transcript

ADAM SHAPIRO: So no need to tell you that we're all paying more for just about everything. Inflation, in some cases, is getting worse, as we heard from Jay Powell, who was testifying before the Senate Banking Committee today. He was talking about the supply chain problems and the bottleneck at the nation's ports. Here's some of what he said.

JAY POWELL: Look at the car companies. Look at the ships docked or, you know, with their anchors down outside of Los Angeles. And this is really a mismatch between demand and supply, and we need those supply blockages to alleviate, to abate before inflation can come down.

ADAM SHAPIRO: Matt Schrap is Harbor Trucking Association chief executive officer, and he can see those ships outside the ports at Long Beach and LA. I don't know if you can see this far out to the East Coast. But I know that you deal with several different trucking companies that move this freight. So the simple question is, what can the rest of us expect, as far as getting those ships unloaded?

MATT SCHRAP: Well, you know, as the old saying goes, if you got it, a truck brought it. And I can tell you that our men and women in our supply chain are working day and night to get those backlogs cleared up. We're not up against any shortage of challenges. But you know, rest assured, the American consumer can know that we're working as hard as we can to get the cargo unloaded and onto the shelves.

ADAM SHAPIRO: What's the biggest problem for your membership? Because again, an association of different hauling companies. Is it a lack of drivers, or is there something else at play?

MATT SCHRAP: Well, you know, honestly, the driver shortages is systemic. We're always looking for qualified drivers to come into the industry. But I don't really think, in conversations with my members, that's really the challenge. One of the major challenges that we're experiencing right now is our inability to return a lot of these empty containers. Unfortunately, there's just only so much room to go around, and the steamship lines only allot a certain amount of containers for each marine terminal to accept. And so once they've hit that cap, if you will, we're unable to secure appointments to bring these empty containers in in order to free up a chassis to move more imports off of dock.

ADAM SHAPIRO: Forgive my simpleton question here. But is there one entity that could perhaps create some kind of empty parking lot for the containers to at least alleviate that problem at the bottleneck?

MATT SCHRAP: Well, you know, the Port of Long Beach has done a great job in converting Pier S into some temporary storage. But one of the main issues that we're facing is the fact that the short-term solutions are not going to take care of the long-term problems. You know, not only is the driver shortage systemic, but the issues related to this backlog have been going on for a long time. It's just now they've been exacerbated by the massive buying demand that has happened here in the United States.

So if one entity can address it, you know, unfortunately, I don't know who that is. It requires a holistic approach amongst all actors. And if we just simply are moving these containers to a different area, it's not taking care of the problem, which really is evacuation of the empty containers off dock by these steamship lines back to their point of origin.

ADAM SHAPIRO: If I'm hearing this correctly-- I'm going to restate what you said so that all of us can understand it. So we've got the stuff. There's demand for product. It's sitting on those ships. We need to unload it. But part of the bottleneck is that we don't have enough ships to take the empty containers say, back to China or to Vietnam, and that's part of what's slowing it all down?

MATT SCHRAP: From our perspective, yes. It's not necessarily that there's not enough ships. It's just that there's not enough ships being dispatched to sweep out these empty containers. It's-- you know, some of my steamship colleagues might disagree, but they don't make money on empty containers going back to Asia.

ADAM SHAPIRO: This may be a bit of a selfish question, but I think a lot of people are wondering, will they be able to buy the things they want to purchase for the holidays to give as gifts, or is that now in jeopardy?

MATT SCHRAP: Well, buy early, buy often is all I can recommend on that side. Honestly, we don't know exactly how this is going to pan out, relative to supply. I don't think Christmas is canceled or some of the holidays are canceled necessarily for gift giving, but consumers need to be mindful that what they're purchasing might take additional time to get to their front steps or may, in fact, not be available at all. So starting now I think would be the most pragmatic approach to having those presents under the tree or wherever when the time comes.

ADAM SHAPIRO: Yeah, I saw the headline that Costco is going to limit the amount of toilet paper you can purchase, but I don't want to make any jokes about that or that as a potential gift going forward. But let me ask you this, when do you see this problem in the rearview mirror?

MATT SCHRAP: Well, some have said it could be another year before we're out of the woods. So without having a crystal ball-- and if I had a crystal ball, I'd probably be in a different profession. But I'll tell you that at the end of the day, we don't know. 18 months, we've heard. We've heard another year. We've heard not until after the beginning of the year. So I guess the time will just tell at this point, unfortunately.

ADAM SHAPIRO: I don't want to dwell on the obvious because we're all frustrated by these shortages, so I want to shift to the future. We had a guest on last week, and the whole issue was driverless trucks, the technology. UPS is doing this. FedEx is doing this. Is there a day coming where-- because you talked about the driver issue being systemic-- where this is not going-- you and I won't be talking about this in four years, that there'll be enough driverless trucks to ease the pain?

MATT SCHRAP: You know, from my perspective, there's always going to be someone's butt in that truck, and especially for local deliveries. A lot of the time, the autonomous perspective is for the over-the-road trucks. You know, Eisenhower built these freeways across the country in order to land planes on them, so they're long and they're straight. And that is the perfect opportunity for autonomous vehicles. But typically, you need a pilot. I equate it more to the autopilot that current airlines are enjoying right now, where you have operators, so to speak, but they're not so directly engaged in the minute-to-minute operations of the vehicle.

For us, I think that autonomous driving vehicles or semi-autonomous or going to be another driver to get younger folks into this industry. The technology is cool. It's there. And frankly, I think that it's going to still need a driver to operate it. But especially down here in the harbor, we're not going to see autonomous, heavy duty, class A trucks ingressing and egressing out of the harbor for quite some time, probably not even in my lifetime, I wouldn't think.

ADAM SHAPIRO: And last question for you-- because the people whose butts are in those driver's seats-- by the way, my grandmother drove a truck during World War II, so yeah four Grammy Hazel. The price of fuel, we've been talking about fuel prices going up. I've got to imagine that's hitting your membership. Or is that cost being passed on to us?

MATT SCHRAP: Well, typically, that's always passed on. It's something that, as our shippers understand, we refer to it as a diesel surcharge. The fuel has got to be used to get those goods there at the end of the day. So as fuel prices go up, on occasion, not necessarily the base rate would go up, but a diesel surcharge would be applied. And typically, it's a flat percentage that's in agreement with the customer and the trucking companies.

But here in California, we're facing down the barrel of additional mandates for zero-emission trucks powered by either electricity or hydrogen. So with some of the volatility right now in the grid and some of the pricing that we experience during peak times, it's very likely that those surcharges might not be for diesel anymore, but it's going to be for some type of fuel.

ADAM SHAPIRO: We appreciate your joining us today. Matt Schrap is Harbor Trucking Association chief executive officer. All the best to you and all the truck drivers out there who keep us all stocked.