Importance of logistics and the supply chain in the State of the Union address comes as no surprise

Given the onus on supply chain and logistics, at both a national and global level, it is not all too surprising that last night’s State of the Union (SOTU) speech by President Joe Biden was replete with key directives and positions focused on our sector, which, as is well-known, has been under a spotlight, of sorts, for the last two years.

While watching the President’s speech last time and, in reading the transcript this morning, it almost read like a supply chain and logistics checklist in a way.

Oil and gas: Near the top of the list, of course, were increasing oil and gas prices, which have seen significant gains of late, due, in large part to the Russia-Ukraine conflict, and the impact it is having on American businesses and consumers.

To that end, the President said that the U.S. is working with 30 other countries to release 60 million barrels of oil from reserves around the world, with the U.S. leading that effort and releasing 30 million barrels from its own Strategic Petroleum Reserve, and is prepared “to do more, if necessary, unified with our allies.”

That is not only a timely, but also a necessary step, given the pain at the pump for U.S. consumers and businesses alike, coupled with the fact that the U.S. continues to purchase oil from Russia, with about 8% of U.S. imports of oil and refined products, or about 672,000 barrels a day, coming from Russia last year, according to a Wall Street Journal report.

Infrastructure: Not surprisingly, on the heels of the recently-passed bipartisan Infrastructure Investment and Jobs Act (IIJA), infrastructure was a key theme of the SOTU, and the President did not mince words when it came to the topic.

“America used to have the best roads, bridges and airports on earth,” said Biden. “Now our infrastructure is ranked 13th in the world. We won’t be able to compete for the jobs of the 21st century if we don’t fix it. That’s why it was so important to pass the Bipartisan Infrastructure Law — and I thank my Republican colleagues who joined to invest and rebuild America, the single biggest investment in history. This was a bipartisan effort, and I want to thank the members of both parties who worked to make it happen. We’re done talking about infrastructure weeks. We’re now talking about an infrastructure decade.”

What’s more, he stressed the importance of infrastructure, as it relates to the nation’s global economic standing, saying that the end results of the IIJA bill will transform America and put it on a path to win the economic competition of the 21st century it faces with the rest of the world — particularly China, as well as create good jobs for millions of Americans, modernizing roads, airports, ports, and waterways.

Over the course of 2022, President Biden also stated that the U.S. will begin work on fixing 65,000 miles of highway and 1,500 bridges in disrepair, a topic that has ostensibly been long overdue for actual action.

Domestic manufacturing: The need to invest in emerging technologies and American manufacturing was also highlighted by Biden.

He pointed to how the U.S. currently used to invest 2% of its GDP in research and development, something it is no longer doing while China continues to do so. As examples of why this is needed, he pointed to Intel’s future $20 billion semiconductor mega site, which will be located outside of Columbus, Ohio.

And the noted there are other similar efforts underway, too, including how Ford is investing $11 billion in electric vehicles, creating 11,000 jobs across the country and G.M. is making the largest investment in its history: $7 billion to build electric vehicles, creating 4,000 jobs in Michigan.

Inflation: The priority of “getting prices under control” was another key logistics- and supply chain-focused aspect of the SOTU.  

“[O]ur economy roared back faster than almost anyone predicted, but the pandemic meant that businesses had a hard time hiring enough workers to keep up production in their factories,” he said. “So, you didn’t have people making those beams that went into buildings because they were out, the factory was closed. The panic also disrupted the global supply chain. Factories close. When that happens, it takes longer to make goods and get them to the warehouses, to the stores, and prices go up. One way to fight inflation is to drive down wages and make Americans poorer. I think I have a better idea to fight inflation. Lower your cost, not your wages. That means make more cars and semiconductors in America. More infrastructure and innovation in America. More goods moving faster and cheaper in America. More jobs where you can earn a good living in America. Instead of relying on foreign supply chains, let’s make it in America. Economists call it ‘increasing the productive capacity of our economy.’ I call it building a better America. My plan to fight inflation will lower your costs and lower the deficit.”

Ocean shipping: President Biden did not pull any punches in addressing how over the course of the pandemic, about half a dozen or less foreign-owned companies raised prices by as much as 1,000 percent and made record profits. He made the case that it is a situation, which is viewed as untenable, and announced a “crackdown” on those container lines that he said are overcharging American businesses and consumers.

While our nation’s to-do list is lengthy, of course, the need to address and focus on these aforementioned supply-chain and logistics-related challenges outlines by President Biden is vital. We have all seen how global and domestic supply chains have felt (and still do) the pain inflicted by the pandemic, as well as other factors, too. As noted by the myriad issues laid out by the President, now is the time to make things better for all of us and to make tough situations better over the long run. Supply chain and logistics are a big part of how successful these efforts will be, make no mistake about that.

About the Author

Jeff Berman, Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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