Biden will announce expanded operations at Port of Los Angeles as supply chain crunch continues
The Port of Los Angeles will begin operating around the clock as the White House pushes to clear supply chain bottlenecks threatening the holiday shopping season and slowing the country’s economic recovery from the global pandemic, senior Biden administration officials said.
Similar steps have already been taken in recent weeks at the Port of Long Beach. Together the two sprawling facilities are responsible for nearly half of all imports into the United States, making them a key part of logistical networks strained by the coronavirus crisis.
The administration officials said the plan, which is scheduled to be announced Wednesday by President Biden, was brokered by the White House as part of an effort to untangle supply chain problems that are making it harder for Americans to get electronics, cars, lumber and other consumer goods that rely on overseas manufacturing.
A global supply chain breakdown has resulted in gridlock at the ports of Los Angeles and Long Beach and beyond.
“It will help us start to address the backlog,” said one of the officials, who requested anonymity before the announcement.
Under the plan, the Port of Los Angeles will nearly double the number of hours that cargo is moving off container ships and onto highways by having crews work through the night. Members of the International Longshore and Warehouse Union will fill the extra shifts, according to officials.
In addition, major shippers and retailers — including Walmart, FedEx, UPS, Samsung, Home Depot and Target — will ramp up their operations to clear cargo out of the ports, freeing up more space on the docks.
The goal is to move an additional 3,500 containers during the night each week.
On Wednesday, Biden is scheduled to announce the plan after a virtual conference involving industry executives and labor leaders. Among the participants are Gene Seroka and Mario Cordero, the executive directors of the Los Angeles and Long Beach ports, respectively.
Many items destined for retailer shelves this holiday season are hopelessly snarled in the global supply chain. What does that mean for shoppers?
The president will also probably use the occasion to promote his infrastructure proposals, which would invest in port facilities and transportation networks to expand their capacity.
Supply chain problems first gained wide attention early this year when U.S. automakers were struggling to obtain enough computer chips that are necessary for modern cars to function. In February, Biden announced a review of the issue.
Since then, shortages and bottlenecks have proved more persistent and widespread than many people, including those in the administration, had expected. The problems pose a serious risk to the economy, adding to inflation and constraining spending, which is crucial for the recovery. With companies unable to get parts and supplies, many haven’t been able to produce enough goods to meet growing demand, resulting in lost sales and delays in hiring as firms can’t ramp up as quickly as they would like.
IHS Markit, an economic forecasting firm, sees the annual pace of U.S. economic growth slowing to just 1.4% in the third quarter, down from a 6.7% growth rate in the second quarter, in part because of supply chain problems. Fourth-quarter growth is looking weaker than previously expected as well.
“I don’t know if there’s anything that can be done at the White House. I think the underlying cause is COVID-19, and not just in the U.S.,” said Ben Herzon, an economist at IHS.
Ramping up operations at the ports will take time. The Port of Long Beach recently began a pilot program to go to 24 hours at one of its six terminals, but it could take weeks or months before the facility can operate around the clock at all of its terminals — and then only if other crucial links of the supply chain come together.
For months now, container ships from Asia have faced unusually long waits for berths and to unload because there are not enough warehouses or warehouse workers, or enough truck drivers to haul the containers.
As of Tuesday morning, there were 58 container ships anchored near the ports of Los Angeles and Long Beach, said Noel Hacegaba, deputy executive director at the Port of Long Beach. Although that’s down from a peak of 73 two weeks ago, in normal times there would be few, if any, waiting to dock.
To help ease the bottleneck, the Port of Long Beach recently made 65 acres of vacant land available to be used as a temporary storage site. But that’s not nearly enough to handle the massive volume, especially ahead of the holiday season.
“The situation we’re in, it’s a system, and every link has to align,” Hacegaba said.
Hacegaba said he doesn’t expect relief from the supply crunch until next summer. Other experts say it could be early 2023 before the bottlenecks are cleared.
The magnitude of the shortage of drivers and warehouse workers is unprecedented. Job openings in the transportation, warehousing and utilities sector have been steadily increasing this year and reached 537,000 in August, a 67% increase from February 2020 before the pandemic, according to the Labor Department.
Extreme heat is endangering California warehouse workers, who often labor without air conditioning.
The Biden administration said it was working with states to accelerate licensing of truck drivers, but the shortage has been building for years as older drivers have left the field and fewer younger people have come to replace them.
“As a country, we’ve convinced every young person that they need to go to college to be successful, and we just don’t think that’s the case,” said Mark Allen, president of the International Foodservice Distributors Assn.
He said one way to address the shortage is to lower the minimum age for interstate commercial driver’s licenses from 21 to 18, but that would require legislation.
The U.S. can’t fix the problems on its own. For example, China operates seven of the 10 largest ports in the world, and it recently suspended operations at some. Coronavirus infections have also disrupted operations at overseas factories.
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