Biden announces 24/7 L.A. port operations to ease supply chain jams
White House gets involved as 40% of shipped goods enter U.S. via 2 Southern California ports
U.S. President Joe Biden announced on Wednesday a deal the White House helped broker in which the Port of Los Angeles will become a 24-hour, seven-days-a-week operation, part of an effort to relieve supply chain bottlenecks and move stranded container ships that are driving prices higher for U.S. consumers.
Biden said the deal was forged after weeks of negotiations and follows a commitment announced last month by the nearby Port of Long Beach to operate a 24/7 pilot program at one of its terminals.
The two ports handle nearly half of all the shipping containers entering the United States. Biden brought together power brokers from ports, unions and big business to hash out how to address a backlog of products that includes 500,000 containers on dozens of ships waiting to be offloaded at the two ports.
"A 24/7 system is what most of the leading countries of the world already operate on now, except us, until now," Biden told reporters at the White House after holding a virtual roundtable with the heads of Walmart, FedEx Logistics, UPS, Target, Samsung Electronics North America, the Teamsters Union and the U.S. Chamber of Commerce, among other groups.
Walmart, FedEx, UPS commit to more off-peak hours
Commitments by the Los Angeles port's operator, longshoremen and several of the country's largest retail and shipping companies are expected to help relieve the backlog. Walmart, FedEx and UPS made commitments to unload during off-peak hours, making it easier for the Los Angeles port to operate non-stop and reduce the backlog.
"Today, Walmart, our nation's largest retailer, is committing to go all-in on moving these products 24/7 from the ports to their stores nationwide," Biden said. Specifically, the company is committing as much as a 50-per-cent increase in the use of off-peak hours over the next several weeks, he said.
"Additionally, FedEx and UPS, two of our nation's biggest freight movers, are committing today to significantly increase the amount of goods they're moving at night," Biden said.
Samsung, Home Depot and Target are also increasing their work in off-peak hours, a senior administration official told reporters ahead of the meeting.
The supply chain blockages are driven in part by the COVID-19 pandemic, as sales of durable goods jumped amid worker shortages and transportation hub slowdowns. White House officials, scrambling to relieve global supply bottlenecks choking U.S. ports, highways and railways, have warned that Americans may face higher prices and some empty shelves this Christmas season.
Republican lawmakers say Biden's $1.9 trillion US coronavirus relief package has fuelled higher prices. A recent analysis issued by the investment bank Goldman Sachs estimates that "supply constrained goods" account for 80 per cent of this year's inflation overshoot, yet the political criticism continues to sting as housing and oil prices add to inflationary pressures.
Debate over 'transitory' nature
Senate Republican leader Mitch McConnell of Kentucky has made inflation one of his central charges against Biden, a sign that getting prices under control could be essential for Democrats trying to hold on to congressional seats in next year's elections.
"The Democrats' inflation is so bad that even though the average American worker has gotten a multiple-percentage-point pay raise over the last year, their actual purchasing power has been cut," McConnell said in a Senate speech last week. "Even dollar stores are having to raise their prices. Just ask any American family about their last few trips to the supermarket, the gas station or the toy store. Heaven forbid if they've had to participate in the housing market or the auto market anytime lately."
The Biden administration has argued that higher inflation is temporary. Yet the supply chain issues have persisted months after the economy began to reopen and recover as vaccines lessened many of the risks from the pandemic.
Consumer prices climbed 5.4 per cent from a year ago, the Bureau of Labor Statistics reported Wednesday. That is significantly above the Federal Reserve's two per cent target. Higher energy, food and shelter costs were prime drivers of price increases in September. Used car and truck prices fell for the second straight month, but vehicle shortages and cost increases in prior months mean that prices are still 24.4 per cent higher from a year ago.
Inflation's persistence has created a divide in how to describe the phenomenon.
Atlanta Fed president Raphael Bostic said Tuesday that he no longer calls inflation "transitory" and expects this current "episode" of inflation could last into 2022 or longer.
Treasury Secretary Janet Yellen, the former Fed chair, insisted to CBS News that the higher prices are "transitory" because once "we get the pandemic under control, the global economy comes back, these pressures will mitigate and I believe will go back to normal levels."
With files from Reuters