The dairy industry’s ability to deliver delicious and nutritious products to people across the country and around the world depends on an efficient, reliable, and resilient supply chain. For dairy, shipping and transport costs are second only to labor costs. Red tape, delays, blockades, and other burdens ultimately make it harder and more expensive to deliver products to the consumer. Additionally, an inefficient or unreliable supply chain can also result in more food waste, a tragedy when more than 90% of Americans already lack sufficient access to dairy products and the nutrients they offer.
Ensuring that we have a strong dairy supply chain also benefits the U.S. economy more broadly. For example, nearly 4,600 jobs at railroad companies depend on business from the dairy industry. All told, the dairy manufacturing sector generates almost $57 million in wages and nearly $1.89 billion in economic impact for U.S. railroad operators alone.
IDFA has a long history of advocacy on issues impacting dairy processor’s ability to transport nutritious dairy products quickly and efficiently to U.S. and global consumers. We recognize that all aspects of the supply chain — roads, water, and rail — are crucial to the successful delivery of dairy products. Each component of this chain is responsible for moving not only the final product, but ingredients, packaging, and equipment. These supply chain modes not only interact within domestic markets but also rely heavily on, and can be strongly influences by the global supply chain.
To address issues impacting supply chain efficiency, reliability, and resiliency, in 2021 IDFA formed its Supply Chain Task Force. By bringing together IDFA member experts in logistics, procurement, and human resources, the task force helps the industry identify and address emerging issues, including labor shortages and stoppages, increasing costs for inputs such as ingredients and packaging, and major challenges moving products across the country and world. In 2022, the task force was an integral part of the coalition that helped shepherd passage of the Ocean Shipping Reform Act, a bill that created new tools to address supply chain bottlenecks.
Shipping and supply chain challenges make it more difficult for the U.S. dairy industry to feed the world. Consumers became familiar with the consequences of our just-in-time supply chain in 2020, during the height of the COVID-19 pandemic. But supply chain challenges did not disappear as the pandemic eased. An incapacitated cargo container, a labor dispute, or a natural disaster — any of these interruptions has the ability to reduce the efficiency, reliability, and resiliency of our global supply chain. To prepare for these inevitable disruptions, IDFA advocates for reforms and tools that will strengthen all aspects of the supply chain, from road to water to rail.
No updates have been made to federal truck-weight limits since 1982, despite the many advancements in vehicle safety and paving technology that have taken place since then. With these changes in equipment and road technology, the U.S. is primed to establish a federal pilot program to evaluate the safety of increased truck weights on interstate highways.
IDFA supports establishing a pilot program that states can opt into that would increase the current vehicle weight limit and add allowances for a proposed sixth axle. This effort could open options for increasing the allowed truck weights on interstate highways from 80,000 to 91,000 pounds, with an additional sixth axle. This increase would save dairy companies hundreds of millions of dollars in transportation outlays, allowing them to keep costs steady for consumers. A study by a dairy economics firm estimated that processors within the cheese, butter, and powder segments could save more than 105,000 truck trips annually, resulting in an estimated $200,000 cost savings for the industry.
Reducing the number of trips also helps address the nation’s truck driver shortage and would reduce the transportation sector’s carbon footprint. Adding a sixth axle is critical to the proposal as it means adding additional breaks to trucks, helping vehicles to stop more quickly and safely and reducing road wear.
During the COVID-19 pandemic, dairy companies had to take extreme measures to address ocean shipping delays. These options included airfreighting product to foreign customers to meet contracts. While it was necessary to put dairy into the hands of the people who needed it, this solution cost U.S. dairy companies hundreds of millions of dollars. Since then, IDFA has taken specific actions to avoid this outcome in the future, starting with enactment of the 2022 the Ocean Shipping Reform Act, which is designed to reduce shipping costs and address ongoing supply chain challenges. IDFA continues to work with the Federal Maritime Commission to ensure smooth enactment of this law.
IDFA also developed the Dairy Exports Working Group, which facilitated dialogue between ocean carriers and U.S. ports in order to develop breakthroughs that could lead to long-term solutions to the challenges faced by U.S. dairy exporters, especially when it comes to moving cargo through west coast ports. The working group’s mission is develop market-driven, win-win solutions that will create new business opportunities, alleviate equipment availability issues, and expedite the flow of U.S. dairy exports to customers.
IDFA has endorsed a commonsense approach to addressing high costs and unreliable service by clarifying the “common carrier obligation” which under current law requires rail carriers to serve the wider shipping public “on reasonable request.” Current ambiguity around this principle has contributed to insufficient rail services and higher costs for the U.S. dairy industry. In recent years, clearly defining the common carrier obligation has taken on greater importance because the railroad industry faces consolidation and has undertaken practices that reduce capacity on the rail network.
Senior Director, Legislative Affairs
