Port Trucking, Trade and Freedom

It is a core principal of the policy positions embraced by the International Warehouse Logistics Association that our members are first and foremost dedicated to removing the barriers to free and efficient trade and commerce. Sometimes that means opposing these barriers before they are erected.

A perfect example of this is legislation recently introduced in Congress by Senators Charles Schumer (D-NY) and Kristen Gillibrand (D-NY) euphemistically called “The Clean Ports Act of 2011,” which would ban truck owner-operators from U.S. ports with the stated intention of cleaning up the air. IWLA has joined all of the other major logistics industry associations representing both customers and service providers in opposing this misguided bill.

Whether you choose to believe in climate warming or not, we all want cleaner air. It is an established fact that ports and those who work in them have invested heavily in time and resources to speed the switch to cleaner trucks. Notable results have been achieved at the Ports of Los Angeles and Long Beach, where the industry has already spent more than $1.2 billion on truck replacement. Since these plans have been implemented by the Ports, over 11,000 trucks have been replaced to meet or exceed 2007 U.S. EPA emissions rules and this program has reduced air emissions by 90% a full two years ahead of schedule.

The same goal is being pursued at other U.S. ports, including Oakland, Seattle, Charleston, Virginia and, most notably in regard to these New York senators, the Port of New York/New Jersey. So, the question inevitably arises, why did these well-established Democratic senators choose to introduce this particular bill at this time?

For years the Teamsters union has been trying to organize port drayage drivers. Because many of these drivers own and operate their own trucks as independent businesses, antitrust laws prevent them organizing under the auspices of a union to set prices. The Teamsters solution is to ban truck owner-operators from port drayage, only allowing company-employed drivers into those facilities who are easier to organize.

The Port of Los Angeles sought to do just that a several years ago, only to see a federal appeals court knock down their plan as a violation of the federal pre-emption of local and state regulation of interstate and foreign commerce. It is this stumbling block to the union’s ambitions that real reason these two senators chose to introduce their bill.

This is one more attempt by labor to gain through regulation and legislation what they cannot achieve by fair and legal means, this time at the expense of small businessmen and women. If enacted into law, this bill would void the enormous investments already made by the port owner-operators in new equipment and put them out of work. The real goal of this legislation is to handcuff private business owners into adopting a business model that only union business agents would find acceptable.

Allowing state and local regulation of motor carrier rates, routes, and services creates an inconsistent patchwork that stifles interstate commerce for the sake of enlarging the pool of drivers that may be organized is dangerously short-sighted. It also would add unnecessary costs to the supply chain and make American goods less competitive in international markets at a time when we are struggling to sustain and extend an economic recovery.

This seems to be another component of a conscious election-year political strategy. Over the past year the National Labor Relations Board majority made up of Obama recess-appointed members has staked out extreme pro-union positions to mollify the President’s union allies who were unhappy over the inability of President Obama and an earlier Democrat-controlled Congress to pass card check legislation.

It is time for the Administration and Congress to stop creating cartels and picking winners and losers in the marketplace, both on the business and labor sides, and instead act to encourage private enterprise and the free flow of trade and commerce.

Supply Chain Product Safety Is Our Guide

When the media reports that an unsafe product has caused illnesses and deaths, every segment of the supply chain is scrutinized. Illnesses arising from contaminated products garner headlines and Congress reacts by convening hearings and proposing legislation that can alter our businesses practices and legal processes.

We all can remember news stories about contaminated products in the supply chain that made newspaper front pages and the TV news, including cantaloupes tainted with listeria bacteria, toys painted with lead paint from China, and sales of counterfeit Lipitor.

Third-party logistics warehouses are an integral part of the supply chain. We store and handle products for every sector of the economy, providing many value-added services, which include managing national and global supply chains for our customers. The facts show that we handle well over 99.99% of products safely and securely without any disruptions.

There are many entry points in the supply chain where contaminated, adulterated or counterfeit product can be introduced. There are good actors and bad actors, and a criminal element seeking to take advantage.

The 3PL warehouse industry strives to maintain our part of the supply chain safely and securely. We pursue every measure, for example, to ensure that food product we handle does not become contaminated or adulterated. We invest substantial amounts of time, money, and training resources in practices and procedures to ensure product safety.

Too often, however, when Congress shapes legislation to address issues in global and interstate commerce, lawmakers fail to recognize the role of the 3PL warehouse in the supply chain. Lawmakers and regulators view the supply chain as a linear, one-dimensional set of transactions between a buyer and a seller. However, the modern supply chain is a complex, collaborative, value-creating network with many intersecting patterns of movement between the beginning and end points. Failure to recognize this distinction results in faulty attempts at legislative and regulatory solutions.

Legislation does not always recognize and appropriately address the emerging role of the warehouse-based 3PL. For example, the 3PL never takes legal title to the product, nor does it have legal authority to choose the buyers or the suppliers of the product inside the box. Therefore, legislation that places the same responsibility on a 3PL as on the manufacturer or other supplier misses the mark, holding a 3PL responsible for things it has no ability to control.

At the same time, by not recognizing the actual role of the 3PL in the supply chain, such legislation misses the mark by losing the opportunity to hold 3PLs accountable for those actions that are within their purview – those relating to the appropriate care and handling of the product as it moves through the distribution process.

The solution is to increase the knowledge of policymakers about how the supply chain works in real life. IWLA seeks to accomplish this by facilitating site visits by congressional staff and agency officials to our members’ facilities. We show them how our members track and trace every shipment, down to a single package, and in the case of medical supplies, down to each prescription bottle. These visits by congressional staff and agency officials help them understand the nature of our role and what we do to execute and implement recall orders. It illustrates just how our portion of the supply chain works to ensure product integrity.

Another solution to misguided policymaking has been to insist the 3PL warehouse industry has “a seat at the table” when industry and government meet to set supply chain policies. The days of expecting our customers to represent our interests in the arena of public policy are long gone.

This approach enabled IWLA to secure the position of the 3PL in the Consumer Product Safety Improvement Act and the Food Safety Modernization Act. In addition, we are undertaking the same sort of site visit and process inspection with FDA officials who will implement the FSMA. We also are working with others in the pharmaceutical supply chain on a federal policy proposal that replaces the patchwork of inconsistent and inefficient state laws.

The bottom line: It is our members’ record of integrity and professionalism that allows IWLA to show how the supply chain can work to provide the utmost protection to the consumer. As advocates for the warehouse-based 3PL industry, it is vital for us to demonstrate to Congress and regulatory agencies that we not only talk the talk, but we walk the talk, that we do our part and we do it well.

Obama Should Approve the Keystone XL Pipeline

Update: After this blog item was posted, the Obama Administration announced that it was going to disapprove going ahead with the pipeline, blaming the Republicans in Congress for forcing a premature decision.

If there was any doubt that President Obama’s decision-making is driven almost entirely by self-regard for his political survival, all you need to do is take a look at two of his most recent decisions.

The President announced three “recess” appointments to the National Labor Relations Board although members of the Senate warned him not to do so and made sure that the Senate was not in recess during that period. Obama’s move is widely seen as unconstitutional on its face. In its defense, an administration attorney said that on three occasions when the members said they were in session were just shams. During one of those “sham” sessions the Senate approved the payroll tax cut extension.

No one except Obama’s most die-hard supporters expects the administration win a case in which their defense is that the President has the authority under the Constitution to determine when the co-equal branch of Congress is in session or not.

So why would Obama do something so bold and almost certain not to withstand judicial scrutiny? His defenders say he needed to act because a do-nothing Congress was refusing to do so. Critics say he was throwing a bone to his big labor union allies who have been unhappy about not getting all they wanted from an administration they helped elect with their money and organizational muscle.

But his defenders have a hard time making their case in the face of another decision he made (or rather didn’t make) late last year when he announced he would hold off until after the 2012 election to decide whether to approve going ahead with the Keystone Pipeline XL project, which would bring oil from Canada’s oil sands into the U.S. Following Obama’s refusal to approve the project, Canada announced that it would explore building the pipeline within its borders – to export the oil overseas to countries other than the U.S.

While there was no good reason for Obama to stall this decision – and plenty of reasons why it shouldn’t have been stalled – there was one excellent political reason: Two of his biggest groups of supporters are at loggerheads over the pipeline: The major environmental groups oppose and organized labor supports it.

When it came to the Keystone XL Pipeline, the same President who felt no compunction in taking bold action by overstepping his constitutional bounds with the NLRB appointments suddenly became timid and chose to vote “present” – his all too common practice when he served as an Illinois state legislator and faced politically uncomfortable votes.

But not approving the Keystone Pipeline at this time will cause significant damage the President has chosen to ignore, not the least of which is that it is a slap in the face to Canada, which is the United States’ largest trading partner and a staunch ally. Even if Canadians can’t vote in U.S. presidential elections, their positive contribution to the U.S. economy is indisputable. For every dollar we spend on Canadian products, including oil, Canadians return up to 90 cents through purchases of U.S. goods and services.

The pipeline is needed to strengthen America’s energy security. Canada is already our largest supplier of imported oil – almost 2.4 million barrels per day, or one fourth of our imports. With this proposed pipeline, our crude imports from Canada could reach 4 million barrels a day by 2020, twice what we currently import from the Persian Gulf.

The Keystone XL Pipeline is a $7 billion privately-funded project that it is estimated will carry more than 800,000 barrels of crude oil daily from western Canada to American refineries. It has been projected that it will create 20,000 construction jobs and about 118,000 related jobs, resulting in more than $20 billion in additional private sector spending and as much as $5 billion in new local, state, and federal tax revenues.

Studies show that fully utilizing Canada’s oil sands crude, including the necessary pipeline infrastructure, can generate more than 500,000 new U.S. jobs and $775 billion in GDP by 2035. Today there are already at least 2,400 American companies in 49 states supporting the development of oil sands by either providing supplies and services in Canada or for pipeline and refinery projects here in the U.S.

As for the environmental concerns, it has been reviewed thoroughly by a host of state and federal agencies for more than three years, including the U.S. Environmental Protection Agency. An August 2011 environmental impact statement found that the project will have limited adverse environmental impacts during construction and operation, and would enjoy a degree of safety greater than any typically constructed domestic oil pipeline system under current regulations

President Obama needs to take bold, decisive action and prove his commitment to creating jobs, bolstering U.S. energy security and improving commerce with our staunch ally, Canada. He must realize that the American people elected him to exercise real leadership by making these kinds of decisions for the good of the country, not to avoid them for his own comfort and convenience.

Obama’s Overreach: What It Means for You

At the beginning of January President Obama announced recess appointments to two federal agencies – appointments traditionally made when the Senate, which is constitutionally charged with approving high-level administration appointments, is in recess.

The appointment that has attracted the most news coverage is that of Richard Cordray to head the new U.S. Consumer Financial Protection Bureau. But at the same time the President appointed three new members of the National Labor Relations Board: Democrats Sharon Block, an official with the Department of Labor official; and Richard Griffin, who has worked as an attorney for labor unions including the AFL-CIO and the International Union of Operating Engineers; and one Republican, Terence Flynn, a lawyer specializing in the National Labor Relations Act.

The NLRB appointments were needed if the board was to make any future decisions because the term of member Craig Becker (an earlier recess appointment) had ended and with it the board’s quorum. Several years ago the Supreme Court ruled that NLRB decisions were invalid unless they were decided by a quorum of the five-member board.

The most recent appointments to the NLRB created a furor among Republican members of the Senate, who assert they had not been in recess. The President’s use of his recess appointment power in this circumstance has created considerable controversy that is likely to be ultimately settled in the courts. What seems clear to even a non-expert observer is that President Obama overreached himself for political reasons in an election year by declaring that he, not Congress, would determine when they are in session.

The administration had been relying on the NLRB to issue a raft of pro-union decisions over the past year to placate its union supporters, who had been upset with the Democrats following the failure of card check legislation in a Democrat-controlled House and Senate earlier in the current administration. The board’s actions range from imposing “ambush” union election rules to requiring that all employers in the U.S. put up posters in their workplaces promoting union organizing -- the latter delayed by the NLRB to go into effect on April 30 for the board to better prepare for an inevitable court challenge.

Before he had to step down and the board lost its quorum, Becker and the other Democrat member of the board on Dec. 26 Craig approved new rule changes over the strong objections of the remaining Republican member that impose significant restraints on employers during union organizing drives.

There is no reason to expect that this recess appointment maneuver by President Obama will create much of a public furor for two reasons: It involves highly arcane constitutional issues, and the mainstream news media that maintained a steady flow of outrage supporting the objections of Democrats to President Bush’s recess appointments, is not merely supine but actively cheerleading the unprecedented Obama actions.

Do you think I am exaggerating? In January 2006 the New York Times published an editorial which called President Bush’s recess appointments “disturbing” and declared that they exhibited “a grandiose vision of executive power” and “a regal attitude.” On January 5 of this year an editorial in the same newspaper called President Obama’s actions “welcome” and literally cheered: “Hear. Hear.”

What is clear is that the Obama administration intends to let nothing get in its way to give whatever aid and comfort it can to its restive union allies who contributed tens of millions of dollars and man hours to the last presidential campaign. We can expect more of these extreme pro-union decisions from the new NLRB, even if they are eventually struck down in court.

What can you do? The answer is: Get involved and get educated. If you have not done so already, become active in the political process, getting to know your member of Congress and taking part in the government affairs activities of your industry association, both at the state and national levels.

IWLA members have become active in our government affairs activities in increasingly numbers. If you are part of the third-party logistics industry, you can get educated through IWLA webinars and other special educational opportunities offered throughout the year. One of these is a special educational session during IWLA’s Annual Convention that will be held March 18-20 in San Francisco.  At that workshop Kerryann Haase and Brian Paul, attorneys with the leading national labor law firm of Michael Best & Friedrich, will present a special two-hour NLRB workshop.

This workshop will give you practical and detailed advice on the steps employers should take to address the recent NLRB rule changes. This workshop is a must-attend event. It will provide an overview of the changing labor relations picture and what you can do to protect yourself and your company.

During the convention, Patrick O’Connor, who represents IWLA’s interests in Washington, and I also will present updates on the legislative and regulatory situation and IWLA’s ongoing efforts. To learn more about the convention and these issues, visit www.iwla.com.

Getting Food Safety and Security Right

Nothing is more important to public safety than making sure that our food and food supply chain are safe and secure. Congress recognized this when early last year it passed the 2011 Food Safety Modernization Act, designed primarily to address safety and security concerns primarily in food manufacturing operations.

To develop the compliance programs and regulations that will implement the new act, the U.S. Food and Drug Administration has reached out to its partners in the food industry for input. IWLA has participated both as a member of an industry coalition addressing this matter, and with our own comments submitted to the FDA last month.

It is expected that the FDA will issue a proposed rulemaking on or near January 4 dealing with many of these issues.

The question always has been: How do we protect America’s food supply most effectively with the limited economic and staff resources available to the government? Congress recognized this as a real issue when it wrote the law by including a provision that specifically grants the FDA authority to make exceptions where additional regulations would be redundant and do nothing to advance the cause of safety.

In recognition of this, the International Warehouse Logistics Association has asked the FDA to recognize in its new rules implementing the new law’s hazard analysis and preventive controls provisions that many third-party warehouse operations do not expose packaged goods to the environment. IWLA believes that facilities solely engaged in the storage of packaged foods not exposed to the environment can be satisfied through compliance with current regulations and other stringent industry standards.

Our concern, like FDA’s is total public safety in the food supply chain. We welcome the FDA’s attention to detail and only ask they equally recognize that when packaged goods in a warehouse are not exposed to the environment (not opened, damaged, or otherwise potentially contaminated) there is no chance of contamination at the warehouse.

Imposing extensive hazard analysis and preventive controls requirements on warehouse facilities solely engaged in the storage of packaged foods that are not exposed to the environment would burden both the FDA and warehouse operators with significant costs and administrative burdens without supplying any corresponding benefit to the improvement of public health.

In recent years the news media has been filled with stories about recalls due to food-related disease. However, no food-borne illness outbreaks have been reported due to improper handling by commercial warehouses. Research has shown that there have been no significant food-borne illness outbreaks attributable to the storage of packaged goods not exposed to the environment at such facilities.

Food products stored in a food grade warehouse operated by IWLA members typically are stored in sealed packages or containers – often in pallet-sized increments – and not exposed to the environment.

Our members also comply with other FDA regulations that should be sufficient to answer any concerns in this regard, including the requirements of the Bioterrorism Preparedness and Response Act of 2002, and the current Good Manufacturing Practices (cGMP) applicable to food security.

In addition, IWLA members are required to comply with extensive preventive controls mandated by their customers, which typically include standards for temperature control, proper storage, and other exacting requirements. 3PL warehouses work closely with the manufacturer to understand the nature of the food products themselves and the conditions under which they must be held for optimum quality and safety.

IWLA warehouse members also routinely implement a full range of standard operating procedures related to the safety and security of the food products they handle. They are typically certified by either the American Institute of Baking or the American Institute of Sanitation. Many also are certified by the International Organization for Standards.

While the product is in the facility, the warehouse conducts weekly and/or monthly inspections -- depending on customers’ requirements -- of all products to ensure they are in usable condition and there are no signs of tampering, significant visible damage, adulteration or pest infestation. Inbound and outbound goods are inspected in the same manner.

The few hazards that may arise in such storage facilities, including those relating to environmental, climate, and pest controls, are already addressed under FDA’s existing regulations and enforcement regime

During last October’s Washington, DC Fly-In, IWLA members attending heard an informational presentation by Sharon Mayl, Senior Advisor for Food Policy at the FDA, about the progress the agency was making in developing programs and rules to implement the new law.

Mayl noted that the agency was actively engaging with stakeholders to help determine reasonable and practical ways to implement the law’s provisions. The FDA needs this help from private industry because of the challenges it currently faces with an enormous workload consisting of 50 new rules, guidance documents and reports, all of which are due in three years.

The members of IWLA stand ready to help the FDA in any way we can to ensure this process is both efficient and effective that can be developed. We are dedicated to making sure the nation’s food supply is the safest and most secure it can be when it is in our hands.