Yahoo Finance Presents: U.S. Secretary of Transportation Pete Buttigieg

Yahoo Finance’s Editor-at-Large Brian Sozzi talks with U.S. Secretary of Transportation Pete Buttigieg about the new Freight Logistics Optimization Works (FLOW) initiative aimed at data sharing as well as the topics of supply chain issues and inflation.

Video Transcript

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BRIAN SOZZI: All right, joining us now is Transportation Secretary Pete Buttigieg. Mr. Secretary, always nice to get some time with you here. Big program out for the administration here called Flow. Talk to us a little bit about it what is it and what are you hoping to achieve.

PETE BUTTIGIEG: So, as you know, we've been working these supply chain issues from the beginning of the administration. And you've heard a lot about our efforts long-term to build physical infrastructure, short-term, working with the ports to help improve their operations. One thing we're hearing again and again as we talk to the different players in our supply chains is that there's a lack of data sharing.

A lot of things you might assume are shared actually aren't, so that a cargo owner, for example, might not actually know what containers their goods are in. A trucker might not know when a container that they're showing up to a warehouse or airport to pick up is actually going to be there. There can even be issues when you look at those big stacks of containers about making sure that the container you want to pick up first is actually on top and not in the middle.

These are the kinds of things that we can improve through voluntary data sharing agreements. And that's what we're working on with the 18 players who signed up today, most of whom, by the way, are private sector actors, but who are responding to the administration's call for a new system to share that data.

BRIAN SOZZI: I believe you're working with the likes of a Target, a FedEx. So what do these private companies contribute to the system?

PETE BUTTIGIEG: So the basic idea is that you give data to get data, not proprietary information that a business wouldn't want to share, but the kind of information I'm talking about now that helps you understand what shipments are where, how they're moving through the system, so that all of the different players from a shipper to a port owner to a terminal operator to a truck driver to a warehouse to a store can see what they need to, to make better plans.

So the businesses involved today included ocean shipping lines, as you mentioned, companies like FedEx and UPS, Target, and True Value, all of whom have a different piece of the puzzle. But the more they're sharing information, the smoother our supply chains are going to work. And when we get that right, that means shorter shipping times, and ultimately, lower prices and less pressure on prices at this moment when, of course, we're battling inflation with everything we've got.

BRIAN SOZZI: Yeah, just picking up on the inflation, Mr. Secretary, we talked to a lot of business leaders here, a lot of CEOs, and they are now-- I just noticed a shift in their tone where they're thinking, inflation is no longer transitory. That's dead in the water. That was a last year thing. It's becoming permanent. Do you think it's permanent?

PETE BUTTIGIEG: I don't think anything is permanent, but I think it's clear that this is a serious economic issue. The president's been focused on prices and the effect on Americans for some time. And here, at the Department of Transportation, we're focused on the piece that we think we can make the biggest difference on, which is the relationship between our transportation systems, which rely on public infrastructure, and supply chains, which may be more private, but they're running across that public infrastructure.

And then we know that we can use the convening power of the federal government to do things like this flow initiative that we're launching today to help share data. Look, this is a very real issue. We're feeling it in our pocketbooks. We're seeing it on store shelves and at the pumps. It's exactly why we need to focus directly on battling inflation, and then also just generally on the cost that Americans face.

The president has been pushing to lower the cost of insulin, lower the cost of prescription drugs, lower the cost of housing, lower the cost of child care. There are things we can do with policy that would have an immediate effect on that, even as there are other issues, like, of course, global oil markets that are a lot more complex than anything that a policymaker can directly control.

BRIAN SOZZI: How will you measure success on an initiative such as this? Is it we might see a decline in CPI month over month? Or is it going to be, it just takes time? Is that the reality of it?

PETE BUTTIGIEG: It takes time, but not as much time as some of the brick and mortar work we're doing. That's why it's so exciting. So look, when we're talking about dredging a new birth at a major port or expanding a rail line in the country, that's something that can take years and years to bear fruit. But this data sharing, this can happen almost right away.

And what success looks like coming out of the gate is more and more companies and actors signing up to be part of this and share their data. What it looks like over time is less pressure on shipping times, and then ultimately, on shipping costs, which does mean lower prices, or at least, less acceleration of prices that people are facing every day.

BRIAN SOZZI: Since we last spoke with you, we've gotten two new, I would say, shocks to supply chains in China, this week announcing that they're closing the key manufacturing hub of Shenzhen because of a new COVID outbreak, and of course, the Western sanctions on Russia because of its war against Ukraine. How debilitating will these issues be for the supply chain?

PETE BUTTIGIEG: Well, there are major curveballs for the economy and for the supply chain. And this is exactly why. We've been so focused on making our supply chains more resilient. We don't know what the next shock is going to be-- a pandemic, a war, a climate related extreme weather event, which is happening more and more frequently every passing year.

But we shouldn't have to know what the threat is going to be to know that we've got to have more nimble supply chains to deal with any threat, to deal with any uncertainty. So many decision makers, certainly in the private sector, but also just family decision makers going through their budgets, are dealing with uncertainty. What we've got to do is help people face that uncertainty by making it a little less painful when the next shocking news event strikes, whatever shape it's going to take.

BRIAN SOZZI: You mentioned gas prices briefly, and they continue to soar across this country. You know, can the public transportation system, as it's situated today, can it handle a potential influx of people that just can't afford to drive to work anymore? Talk to us about some of the investments you have started to make in infrastructure here from the public transport side.

PETE BUTTIGIEG: Well, we do have a lot of capacity in public transit. And that's something that I hope becomes a means of choice, alongside driving, that people have good options and good affordable options to get to where they need to be. Look, we need to make sure that there is less pressure on family budgets from transportation, which is often the second biggest budget item after housing itself.

One of the tools that we have in our toolkit to do that is to make sure there's access to excellent public transportation. And right now, ridership is still making its way back up. You know, I took at the beginning of this week, I took the subway to go to a public transit conference because that seemed like the right thing to do, and noticed on one hand how much pride there was in the workers making sure things were running effectively, but on the other hand, how much room there is still to grow back to the level of ridership and the commuting patterns that I'm used to when I took the subway every day here in Washington.

BRIAN SOZZI: Are you worried that that influx of folks, that might lead to inflation in public transport prices, right alongside gas prices going up?

PETE BUTTIGIEG: That's the great thing about public transport, is it's not something that just has this volatility up and down. Your fare doesn't depend on global oil markets. It's set in a way that is designed to be as affordable as possible for everybody. And some transit authorities are actually beginning to experiment with not charging a fare because there's so much of a benefit to the community when somebody uses public transportation.

Even if you don't use public transport, even if you drive, you're better off when other people do because it means that there's less congestion. And so there's such benefit from an economic perspective, from a climate perspective, to good quality public transportation and a lot of room for it to absorb more. Now I will say, the future of public transportation is going to evolve and not look the same as the past. It's not all only going to be about, for example, big buses. Big buses will always be part of public transportation.

But more nimble solutions, flexible solutions involving micromobility for the last mile, you even see some transit authorities using a kind of rideshare style services akin to an Uber or Lyft as part of their overall package. I think all of these innovations are going to make a big difference to make it easier and more affordable to get around in the years to come.

BRIAN SOZZI: Do you think this oil shock we are experiencing here ultimately ignites more investments in that space under the realization we can't continue the way we have been?

PETE BUTTIGIEG: Well, clearly, the future can't look exactly like the past. And so I think you will see continued interest in public transit. You're certainly seeing it drive renewed interest in electric vehicles. And that's one of the reasons why we're focusing so much on making electric vehicles more affordable.

Remember, we've proposed price credits, tax credits that would take thousands of dollars off of the cost of an EV, so that a pickup truck that today is $40,000 would be in the high 20s for a family considering whether that's right for them, but also making it easier to use EVs with a charging network that you can count on, no matter where you live and no matter where you're headed.

So those are some of the changes that I think are going to be accelerated by these continued ups and downs. And look, as long as we've relied on fossil fuels, we've been vulnerable to these kinds of crazy ups and downs that are triggered by all kinds of macroeconomic and global effects, including, of course, something that is likely to happen any time a significant oil producing country goes to war.

BRIAN SOZZI: Mr. Secretary, we got recently the next round of Tesla price increases. And not to single them out, but they are the leader in electric vehicles here. Now the cheapest option for them, a Model 3, to get involved in the electric vehicle space, it is now $47,000, in large part because they're experiencing inflation of their own. What do you make about these price increases? Is that hurting EV adoption?

PETE BUTTIGIEG: Well, certainly, any time that price is a barrier, that's going to stand between people and having the chance to own an EV, which is something we really want to try to overcome because, of course, once you do own one, you have those benefits in terms of the fuel savings and the maintenance savings that tend to come with EV ownership.

Now the good news is there's a wide range of products out there, so everything from smaller vehicles that start in the 20s right now, all the way up to the higher end Teslas or Hummers or Porsches that are well into six figures and everything in between. But we've got to continue driving those overall costs down and driving some of the other barriers down, like not being sure whether you'll be able to have a charger.

BRIAN SOZZI: Do you anticipate getting these credits passed at some point?

PETE BUTTIGIEG: I think so. I can't say exactly what the legislative package will be or what the timing will be. But I think it's very important, not just for climate, and it's definitely important for facing the climate challenge. But it's important for the American auto sector. And if you talk to a lot of the OEMs, they talk about how important it is to their business plans, to be able to count on that support.

Remember, the transition to EVs is inevitable, but what's not inevitable is for it to happen quickly enough to meet the climate challenge, for it to happen equitably so that everybody can get in on the benefits, and for it to happen in a way that is made in America. And the president, every time I see him, is talking about making more of our products in America, creating American jobs on American soil for American workers. We want the EV revolution to be a big source of those good-paying American jobs.

BRIAN SOZZI: All right, we'll leave it there. Transportation Secretary Pete Buttigieg, always good to snag some time with you. Stay safe. We'll talk to you soon.

PETE BUTTIGIEG: Same here. Good to be with you. Take care.

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