As supply chain troubles mount, Biden targets Los Angeles port

President Joe Biden said Wednesday that a new plan to keep a key U.S. port open “24 hours a day, seven days a week” would relieve pressure on an overworked supply chain that has frustrated Americans and blossomed into a major economic shortcoming.

Speaking at the White House, Biden also hailed commitments from top importers such as Walmart, FedEx and UPS to use the extended hours at the Port of Los Angeles to remove shipping containers that have slowed freight operations.

The president spoke following a 17-person “virtual roundtable” with port directors from Los Angeles and Long Beach, Calif., top officials from the Teamsters and AFL-CIO labor unions, the U.S. Chamber of Commerce, and other business groups.

As consumers confront random shortages of clothing, toys, groceries and cars, the disrupted supply lines that define the pandemic-era economy are evident in dozens of giant container ships anchored off the coast of Southern California. Some vessels wait two weeks for an unloading berth.

Similar delays await freight once it reaches the shore, where docks, rail yards and warehouses are jammed with goods, the fruits of an economic recovery the administration boasts is robust.

Administration officials promise a “90-day sprint” to clear a path for cargo. Several companies participating in the White House event, including Walmart, made “specific volume commitments” about containers they will remove from California docks. Leaders of the International Longshore and Warehouse Union have agreed to work longer hours, provided individual terminal operators pay up.

Biden said today’s announcement had “the potential to be a game changer” in unclogging the nation’s supply lines.

But the extended hours the administration is touting represent something less than the full around-the-clock operations that are typical of the world’s most advanced cargo-moving facilities.

The Port of Long Beach, which makes up one half of the nation’s chief import gateway, began a pilot program last month of late-night and predawn work. An administration official said Tuesday that Long Beach had “already gone to 24-7″ and Los Angeles would be “meeting that effort.” But only one of the Long Beach port’s six container terminals works 24 hours a day, and it does so only Monday through Thursday, according to Noel Hacegaba, the port’s deputy executive director of administration and operations.

Biden said the L.A. port, which is adjacent to the Long Beach facility, would be open for 60 additional hours each week. But Phillip Sanfield, a port spokesman, said he could not say how many L.A. terminals will now begin operating around-the-clock. And Gene Seroka, executive director of the L.A. port, said on twitter that “operational details are being discussed and worked out with the supply chain stakeholders.”

Some industry executives described the administration’s latest initiative, which the White House billed as “nearly doubling” the port’s cargo-handling hours, as incomplete. Matt Schrap, chief executive of the Harbor Trucking Association, whose members service the ports, said the measure will make a “big difference” only if terminals abandon requirements for truckers to return a specific type of empty shipping container before collecting a full one.

And Craig Grossgart, senior vice president for global ocean at SEKO Logistics, said: “It will accomplish zero. It’s just window dressing.”

Indeed, the administration said an additional 3,500 containers each week would move through the L.A. port during the new nighttime hours, thanks to promises from six companies—Walmart, FedEx, UPS, Target, Home Depot and Samsung.

The port expects to process 79,289 containers this week, according to its website.

The administration says the giant companies will set an example that will spur others to follow. But longer working hours at the neighboring ports, which operate as a single complex under dual management, will matter only if trains, trucks and warehouses all do the same. Already, truckers have been reluctant to show up at the Long Beach port during the 3 a.m.-to-7 a.m. slot known as the “hoot” shift—named for the hoot owl—because they have nowhere to take containers at that hour.

Major railroads “have long been 24/7 operations,” said Ian Jefferies, president of the American Railroad Association.

Supply headaches are posing a direct challenge to Biden’s hopes of a smooth economic recovery. Federal Reserve Chair Jerome H. Powell has said that logistics headaches are responsible for inflation lasting longer than he expected.

The mounting disruption, mirrored in multiple countries, is having an economic impact that extends beyond consumer and business irritation over delayed deliveries. Barclays economists this week lowered their growth forecast for the United States and Europe, citing enduring supply interruptions.

“These persistent supply disruptions are a stagflationary impulse to the global economy, as they now increasingly also affect activity, after having already caused stubbornly higher-than expected inflation,” Barclays wrote in a research note, referring to the 1970s phenomenon of soaring prices and anemic growth.

Fastenal, a Winona, Minn.-based industrial distributor, which has been struggling to move imported fasteners through clogged U.S. ports, told investors Tuesday that it is reducing its planned capital spending this year by $15 million to $25 million.

“Supply chain difficulties are limiting our purchases of vehicles, brand supplies and other products,” Holden Lewis, the company’s chief financial officer, said on an earnings call.

Bed Bath & Beyond’s share price fell 22% last month after higher freight costs and “unprecedented supply chain challenges” dented profits. The company does not expect any improvement in the supply chain situation through the end of November, chief financial officer Gustavo Arnal told analysts.

The White House is eager to demonstrate progress on a vexing host of supply chain snarls. Yet officials note that the cargo carriers, ports, terminal operators, trucking lines and warehouses involved are almost entirely private-sector entities, leaving the president with little power to command immediate improvement.

The federal government’s chief role is acting as an “honest broker” to bring together executives from each link in the globe-girdling supply chain, one official said.

In June, the president established a White House task force on supply chain issues, headed by Transportation Secretary Pete Buttigieg, Commerce Secretary Gina Raimondo and Agriculture Secretary Tom Vilsack.

This summer, Biden named John Porcari, a former Obama-era transportation official, as its “ports envoy.” (At Wednesday’s White House event, the president twice referred to Porcari as “Joe.”)

Porcari last month scored an early success by winning longer operating hours at the Ports of Los Angeles and Long Beach, the nation’s top import gateway. Yet the first night of longer hours at one Long Beach terminal did not draw a single truck, Grossgart said.

Since the experiment began three weeks ago, the number of ships at anchor in San Pedro Bay has dipped from 70 to 61. But that floating traffic jam—which was virtually unknown before the coronavirus pandemic—remains twice as big as it was in early August.

Ports are not a new concern for Biden. In 2014, while vice president, he described port improvements as “a passion of mine.” The administration’s bipartisan infrastructure package contains $17 billion to modernize the nation’s ports.

Administration officials acknowledge there is only so much they can do to solve the immediate supply crisis. Much of the nation’s freight-moving infrastructure relies on facilities that were built decades ago, long before the era of globalization and e-commerce.

“You can’t turn a light switch in this very complicated supply chain and have it change overnight,” one official said.