Washington, D.C. – On June 5, 2025, the U.S. Congress Joint Economic Committee held a hearing titled Barriers to Supply Chain Modernization and Factor Productivity Enhancement. Members engaged with witnesses on how “smart regulation” and harnessing cutting-edge technology can be prioritized to enhance America’s supply chain and economy.

Watch Chairman Schweikert’s remarks here.

Chairman Schweikert: What can the future look like?

Chairman David Schweikert (R-AZ) asked the witnesses what should be prioritized if they could redesign the U.S. supply chain from scratch: regulatory reform, adoption of advanced technology, domestic repatriation? Or bluntly, “How efficient could we make our supply chain infrastructure?

Dr. Patrick McLaughlin emphasized the need to allow the market to function without burdensome government interference, whether it be regulatory or legal infrastructure. He noted, “We need things that are streamlined, that are flexible, that accommodate new technologies when they do come about, because we can’t predict all the ones that [will].”

Dr. Yossi Sheffi attacked regulation hindering innovation: “The New York Times reported that it takes 9 times per mile the cost of building in California compared to France! So, talk about regulation, but it’s not only regulation, it’s corruption, to be fair. There’s a lot of things that are intuitive that we must clean out in order to get European level ports, European trains, Chinese level highways, and Dutch level ports.”

Dr. Jean-Paul Rodrigue underscored how uncertainty, particularly from U.S. trade policy, stifles investment, even when technology and capital are available: “It’s not like we don’t have the ability to operate. What we don’t have is the capability is to create an investment framework, which is stable enough for that capital, which is already there, and technology that is already there.” He also highlighted how attempts to streamline supply chains and invest in port modernization are thwarted by regulatory roadblocks.

Dr. Sujai Shivakumar highlighted the workforce gap and the need for better alignment between labor market demand and education. “Firms and businesses can’t find the characteristics, talents, and skills they need…There is a possibility to do software to tell workers ‘do this course in the community college, top it up with this credential, take this university credit,’ and work your way to what the industry is asking for. That is something that is missing, and the technology to do that is off the shelf.” He closed by concurring that a “revolution in accreditation” may be necessary to fix the workforce.

Bridging the issue of demographic headwinds as the urgent need to increase productivity, Chairman Schweikert pooled the witnesses on using technology, artificial intelligence, and crowdsourcing for a revolutionary modernization of regulation.

Dr. Patrick McLaughlin praised Chairman Schweikert’s vision of using AI and crowdsourcing as “tremendous upgrades to accommodate new technology,” positing that EPA regulators would love to crowdsource air quality monitoring. However, he underscored how overregulation and the slow pace at which they are updated hinder such a reality. He pointed to the authority of Congress under the Administrative Procedure Act to “upgrade the pace” regulation keeps up with technology.

Dr. Yossi Sheffi affirmed that “we have to find a way to overcome short-term resistance to get long-term benefits,” citing industry opposition to truck automation. He also pushed for immigration reform, claiming, “Angela Merkel did not allow a million Syrians to come in because of a good heart; she allowed it because Germany was losing workers in factories, and she understood it early. We need to create some sort of points system” for immigration.

Dr. Jean-Paul Rodrigue proclaimed, “all roads lead to automation,” but warned that failing to synchronize it beyond industrial sectors could create disruption. He also believed “automation is going to re-insight us to look at the regionalization of manufacturing. We will still trade long-distance… but I don’t think it makes sense to make a toy on the other side of the world to move it here.”

 

Watch Congresswoman Spartz’s remarks here.

Congresswoman Victoria Spartz: Common sense, non-political solutions

Rep. Victoria Spartz (R-IN) sought common sense solutions for the automation and modernization of the supply chain without excessive government involvement. She asked the witnesses about the biggest barriers for businesses and about incentives and regulations that need to be reshuffled for supply chain automation.

Dr. Yossi Sheffi drew a stark comparison between U.S. ports and their foreign counterparts: “Visit Dubai, Singapore, Shanghai, then go to the Port of LA. It’s depressing.”

Rep. Spartz also considered how the United States could build technical skill development and incentivize education outcomes optimized for the labor force.

Dr. Yossi Sheffi insisted on “allowing parents to choose schools. This will increase significantly the use of [religious] schools…or magnet schools…we have somehow to release the hold that the unions have on schools.”

Watch Rep. Estes’ remarks here.

Congressman Ron Estes: Putting America First in Production and Growth

Rep. Ron Estes (R-KS), lamenting the closures of factories and the offshoring of jobs, asked how smarter regulation could benefit the economy and reduce the deficit.

Dr. Patrick McLaughlin cited a British Columbia study finding that cut regulation by 40% between 2001 and 2004, resulting in 1.2% GDP growth and an increased tax base. Based on this policy, he suggested cutting regulation directly correlates with GDP growth and increased tax revenue.

Rep. Estes then examined how the United States can use new technology like AI to promote more domestic manufacturing.

Dr. Yossi Sheffi stated that using AI will allow businesses to look and analyze more data for the future, emphasizing that “information flowing seamlessly across a company immediately makes it more efficient” and “using modern AI allows you to forecast better because you can take a lot more factors into account.”

 

Watch Senator Blackburn’s remarks here.

Senator Marsha Blackburn: How do we Build a Ready Supply Chain?

Sen. Blackburn (R-TN) highlighted the development of Memphis as a successful intermodal transportation hub in her home state of Tennessee “without a government overriding impact, via the private sector, without industrial policy.” Based on this success, she asked the witnesses about the importance of developing such hubs.

Dr. Yossi Sheffi compared Memphis, TN, to other successful hubs: “Look at the success of Silicon Valley, look at the success of Hollywood, look at the success of Wall Street: these are companies of the same ilk right next to each other, because there is a flow of knowledge in coffee shops, in chance meetings, between people that elevate the entire cluster…[Memphis] is a classic example of a very successful logistic cluster…Because it’s a good cluster, manufacturing has moved in.”

Dr. Jean-Paul Rodrigue expanded on Dr. Sheffi’s comparison and noted the long-term benefits of such hubs: “The concept of co-location and accessibility provided by transportation is a very important factor: it creates multiplying effects… and it creates, as we mentioned, these clusters. And once these clusters are created, what we found out is it cannot very be easily dismantled; it takes a long time.”