What does the US infrastructure law mean for supply chains?

10 November 2021

The US Congress has passed a $1.2tn Bipartisan Infrastructure Act which will “strengthen supply chains” and “ease inflationary pressures”, according to The White House.

Congress finally passed president Joe Biden’s bill after months of negotiations.

The deal is the single largest federal investment in American history, and looks to strengthen the US’s supply chains following disruptions caused by the Covid-19 pandemic. 

The White House said: “The legislation will help ease inflationary pressures and strengthen supply chains by making long overdue improvements for our nation’s ports, airports, rail, and roads.

“Decades of neglect and underinvestment in our infrastructure have left the links in our goods movement supply chains struggling to keep up with our strong economic recovery from the pandemic.

“The Bipartisan Infrastructure Deal will make the fundamental changes that are long overdue for our nation’s ports and airports so this will not happen again.”

Industry group the Coalition for America's Gateways and Trade Corridors (CAGTC) said the Act would “improve” the country’s supply chains it included $78bn investment into freight systems.

CAGTC executive director Elaine Nessle said: “Our freight system is experiencing an unprecedented level of stress as our economy rebounds from the global pandemic.

“The deal’s historic investment in freight infrastructure comes at a critical time and will enable strategic investments necessary to improve our supply chain infrastructure and ensure it can meet the challenges and demands of tomorrow.

“The office’s leadership on holistic freight policy and planning will have an immediate impact and support economic competitiveness in the years to come.”

These are the key points for how the Act looks to strengthen supply chains:

• Ports and air freight investment

The deal commits the government to investing $17bn in ports and a further $25bn in airports, including airfreight. 

The White House said the funding would reduce backlogs and congestion.

It said: “Modern, resilient, and sustainable port, airport, and freight infrastructure will strengthen our supply chains and support US competitiveness by removing bottlenecks and expediting commerce and reducing the environmental impact on neighboring communities.

“Decades of neglect and underinvestment in our infrastructure have left the links in our goods movement supply chains struggling to keep up with our strong economic recovery from the pandemic. The Bipartisan Infrastructure Deal will make the fundamental changes that are long overdue for our nation’s ports and airports so this will not happen again.”

• Improving roads

The Act commits $110bn of investment to improving the US’s roads, bridges and to support major infrastructure projects.

The White House said one in five miles of highways and major roads and 45,000 bridges in the US are in “poor condition”. 

The Act will also commit $1bn for “nationally significant freight and highway projects” through to 2026, which it is claimed will reduce highway congestion and bottlenecks; improve the safety, efficiency, and reliability of the movement of freight; and improve connectivity between freight transportation modes.

• Attracting drivers to the trucking industry

​​The deal includes initiatives to grow the trucking workforce. The American Trucking Associations currently estimates the US has a shortfall of 80,000 truck drivers.

It will fund campaigns to increase awareness of career opportunities in the transportation sector and apprenticeship programmes for drivers under the age of 21.

The Act acknowledges only 6.6% of truck drivers are women, and it commits the government to “exploring every opportunity to encourage and support the pursuit and retention of careers in trucking by women, including through programmes that support recruitment, driver training, and mentorship”.

It will establish a Women of Trucking Advisory Board to help promote this.

• Improving data sharing

Transport secretary Pete Buttigeieg said the deal will make money available to improve data sharing systems between ports, terminal operators and truckers to drive efficiency in supply chains. 

“We need to make sure our ports are as efficient as possible,” he said.

“Ports aren’t a single entity. You’ve got the port itself which is kind of like a landlord. Then you’ve got the terminal operators, then you’ve got the truckers, and all of them are interacting with competing shipping companies to move those containers. 

“They need to be able to exchange and share data, and we will definitely want to support ways to do that.” 

This includes plans to standardise data-sharing requirements between the different operators.

• Reducing US reliance on international markets

The US is looking to become less reliant on foreign markets for certain components across sectors, establishing stronger domestic supply chains. 

The deal sets out plans to reduce reliance on Asia for electric vehicle batteries by establishing a Battery Material Processing Grant Program to fund the expansion of manufacturing in the US. 

The Act said the scheme will “enhance national security” by ”reducing the reliance of the United States on foreign competitors for critical materials and technologies” and “establish alternative supply chains for critical materials that are found in electric drive vehicle batteries”. It will “study the impact of forced labour in China on the electric vehicle supply chain”.

The law also sets out provisions for reducing reliance on international supply chains for PPE, with more domestic manufacturing.

The Act said: “The Covid-19 pandemic has exposed the vulnerability of the United States supply chains.

“The United States needs a long-term investment strategy for the domestic production of PPE items critical to the United States national response to a public health crisis, including the Covid-19 pandemic.”

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