President Biden on Wednesday addressed ongoing supply chain problems as major retailers warn of shortages and price hikes during the upcoming holiday season.
The White House says plans are in place to increase capacity at major California ports and with large goods carriers, including Walmart, FedEx and UPS.
Biden announced that the Port of Los Angeles has agreed to essentially double its hours and go to 24/7 operations. In doing so, it’s joining the Port of Long Beach, which launched similar nighttime and weekend shifts a few weeks ago.
Members of the International Longshore and Warehouse Union have said they are willing to work extra shifts, the White House says.
“This is the first key step,” Biden said, “to moving our entire freight transportation and logistical supply chain nationwide to a 24/7 system.”
Together, the two California ports handle about 40% of the container traffic that enters the United States.
Biden also touted agreements the White House has brokered with private sector entities to get goods flowing again.
“Today’s announcement has the potential to be a game changer,” Biden said. Noting that “goods won’t move by themselves,” he added the major retailers and freight haulers need to “step up as well.”
Biden announced that three of the largest goods carriers — Walmart, FedEx and UPS — are taking steps to move toward 24/7 operations.
Getting all the links of the chain to work together
Their commitment to launch 24/7 operations is “a big deal,” Transportation Secretary Pete Buttigieg told NPR’s Asma Khalid. “You can think of that as basically opening the gates. Next, we’ve got to make sure that we have all of the other players going through those gates, getting the containers off of the ship so that there’s room for the next ship, getting those containers out to where they need to be. That involves trains, that involves trucks, so many steps between the ship and the shelves.”
Buttigieg said a White House meeting Wednesday with retailers, shippers and port leaders aimed “to get all of those players into the same conversation, because even though they’re all part of the same supply chain, they don’t always talk to each other. That’s what this convening is about and why it’s so important.”
As for concerns that there will be shortages of toys and other goods in stores for the Christmas season, Buttigieg urged consumers to shop early, adding that retailers such as Walmart are committed to “getting the inventory to where it needs to be, even in the face of things happening.”
It’s the latest step on supply chains
The supply chain woes are one of several economic challenges the Biden administration faces. Job growth has also slowed sharply in the past two months. And forecasters have been downgrading their expectations for economic growth this year.
White House press secretary Jen Psaki said solving supply chain issues requires cooperation between the private sector, including rail and trucking, ports and labor unions.
“The supply chain bottlenecks range industry to industry, but we certainly know addressing … those bottlenecks at ports could help address what we see in many industries across the country and, frankly, are leading people who are preparing for holidays, for Christmas, whatever they may celebrate — birthdays — to order goods and get them to people’s homes,” she said Tuesday.
It’s not the first time the administration has tried to tackle supply chain problems.
Soon after taking office, Biden signed an executive order kicking off a broad review of products that had been in short supply, including semiconductors and pharmaceutical ingredients.
Biden created a task force over the summer to address the most urgent shortages and then tapped a former Obama administration transportation official, John Porcari, to serve as the new “ports envoy” to help get goods flowing. Porcari helped broker the agreements with the ports and the union.
The role of recovery aid
In a call with reporters Tuesday night, a senior administration official pushed back against concerns that direct payments from Biden’s March relief law have exacerbated the problems, fueling demand for goods and possibly discouraging needed labor.
The administration says the supply chain disruptions are global in nature, a challenge that’s been made worse by the spread of the coronavirus delta variant. Biden reiterated that in his remarks Wednesday, saying the pandemic caused factories to close and disrupted ports around the world.
Two of the world’s largest ports in China experienced partial closures aimed at curbing COVID-19 outbreaks, the White House notes. And in September, hundreds of factories closed under lockdown restrictions in Vietnam.
The administration agrees that part of the current issue has to do with increased demand, but they see that as a positive indicator of how the United States has recovered faster from the pandemic than other developed nations.
As for effects on the labor supply, the official said that’s more complicated.
The recovery package’s direct payments and extra unemployment benefits were a “vital lifeline” for many struggling families, the administration official said.
“And to the extent that that’s allowing people to be more thoughtful about when and how and for what offer they choose to reconnect to the labor force, that ultimately is very encouraging,” the official added.