The Utah Inland Port Authority (UIPA) is forcing Salt Lake City taxpayers to underwrite a big buildout of freight-handling facilities in its northwest industrial zone. In its recent charm offensive, its officials depict this buildout as better than Santa Claus, clearing up West Coast port congestion, replacing polluting diesel trucks with clean trains and making Salt Lake the center of the logistics universe.
With hucksterism like this, Utahns should keep their hands on their watches to be sure they aren’t stolen.
If the big buildout causes more Salt Lake freight to arrive by rail directly from L.A. docks, it simply means freight will be offloaded by diesel trucks in Salt Lake rather than L.A., exporting pollution and congestion from California to Utah. Nor are trains clearly less polluting than trucks. Studies find that trains may actually produce more pollution per ton of freight or per passenger than cars and trucks, especially where trains use the oldest, dirtiest engines, as Union Pacific currently does.
Most of Utah’s imports come from Asia and are funneled through the Los Angeles San Pedro harbor. From there, diesel trucks haul 90 percent of this freight 600 miles to the Wasatch Front. We have all heard the horror stories — ships waiting weeks to unload their freight, and docks, container yards and warehouses piled high with containers. UIPA argues that the Trans-Pacific freight pipeline is clogged because “We are trying to shove too much stuff through a too small pipe.” This statement ignores the central role that the pandemic has played in creating the current logistics crisis.
The pandemic is the root cause of our broken supply chain. It locked down the world’s economy in early 2020, causing global trade to plunge 12%. Government rescue spending programs soon followed, increasing global trade by double that amount. In a few months, ports and carriers went from shedding capacity to desperately searching for extra capacity.
Labor is the logistics resource damaged most by this whipsaw in demand for goods. Dock workers and truck drivers were laid off, or sought other work. Some caught COVID. Others had to quit to tend their school-age children. There was a shortage of truck drivers prior to pandemic, but the pandemic increased it to historic proportions. There are still a half-million truck driver and warehouse jobs that the industry can’t fill. Job recruiters can fill only one of every nine truck driver job postings. Consequently, there are not nearly enough trucks to take all of the imports arriving from Asia off West Coast or Utah docks and move them to their ultimate destination.
With inadequate “takeaway capacity,” the entire Trans-Pacific supply chain has backed up. Each link in that chain (ship, dock, container, train, warehouse) has become an unintended storage site. As freight lingers in the system, physical storage infrastructure has to expand to compensate for the lost velocity.
The massive infrastructure buildout that UIPA plans can’t repair the broken Trans-Pacific supply chain. That won’t happen until truck drivers and warehousemen return in large numbers. Unfortunately, Utah is less able to overcome a shortage of such labor than almost any other state. With its 2.4% unemployment rate, it has the second tightest labor market in the nation.
The pandemic broke our supply chain in a way that happens once a century. Epidemiologists anticipate the pandemic will subside by the end of 2022. Then, economists expect consumers to throttle back their spending on goods to one-third of their income — the historical average. This will cause International freight volume to return to pre-pandemic levels as well.
Longer-term, experts expect that the fragility of the Trans-Pacific supply chain exposed by the pandemic will cause industry to reduce offshoring, localize suppliers, bring manufacturing back to the United States, and reintegrate production, as Tesla’s has done. Experts also expect that by 2025, autonomously driven caravans of Tesla’s electric semis will haul long-distance freight for 25% less than rail, causing a swift collapse of the freight rail industry.
Aware of all this, experts warn that overbuilding physical logistics infrastructure will not fix the world’s broken supply chain. If UIPA doesn’t heed those experts, Salt Lake City taxpayers will be left holding a multi-million dollar bag of stranded logistics assets.
Malin Moench
Malin Moench, Holladay, has degrees in law and economics from the University of Utah. After 37 years of legal analysis and economic modeling work for the federal government, he now volunteers for the Citizens’ Climate Lobby.