L.A. port goes 24/7 to fight backlog

The United States government has aggressively moved to unclog a backlog of ships and containers out of U.S. ports.

While farmers will benefit, it was the pain being felt by American consumers, and fear of a widespread Christmas grinching because many products would not be deliverable by Christmas, that drove U.S. President Joe Biden to act.

“With holidays coming up, you might be wondering if the gifts you plan to buy will arrive on time,” said Biden Oct.13.

“Today we have some good news: we’re going to help speed up the delivery of goods all across America.”

It is doing that in part by getting the Port of Los Angeles to work 24 hours per day, seven days per week, a move previously undertaken by the port at Long Beach. Those ports account for 40 percent of all U.S. imports by ship.

As Biden spoke, about 80 ships were queued up waiting to get into the ports. The deal the administration brokered required sign-on by port authorities, longshore workers and major U.S. importers.

The clogged state of the North American ports has outraged farmers across the continent. Exports have been delayed and containers unavailable as exploding demand from U.S. consumers for Asian-manufactured goods has empty containers being shot back to Asia as soon as they are unloaded, rather than being filled with North American goods to send back across the Pacific.

This deal was not forged to help farmers, but to unclog the flow of goods to American stores in order to tame the surging pace of inflation, which has recently topped five percent in the U.S.

The U.S. Federal Reserve bank tries to achieve a two percent inflation rate, something that it almost never exceeded from 2010-20. But after the pandemic’s disruptions combined with a galloping economic recovery, inflation shot higher as too many consumers fought for too few goods.

The ability of those consumers to pay for the goods, regardless of higher prices, was much helped by enormous government spending in the U.S. and Canada, something that is set to continue in the U.S. A massive multitrillion-dollar spending package backed by Biden is expected by economists to add to the inflationary pressure.

Biden’s port action comes as his political opponents focus on the cost of living issue as midterm elections near.

“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,” said Senate Republican leader Mitch McConnell.

“Even dollar stores are having to raise their prices.”

Unclogging the ports is seen as important because about 80 percent of the core inflation rate increase is due to goods in “supply constrained” categories. If more of those goods can get to store shelves, the reasoning goes, the less pressure there should be to raise prices since consumers have enough goods to go around.

There has been a raging debate among economists, central bankers and government authorities around the world for months about the current surge in inflation.

Most mainstream economists believe the inflation is “transitory” and will disappear once the supply constraints have been alleviated and the sudden growth from the economic recovery passes to a presumably more stable rate.

A growing minority believe that the enormous amount of public spending around the globe has ignited an inflationary fire that will be hard to quench. They see surging house prices and the commodity bull market as evidence of too much money chasing too few assets.

The 24-7 work schedule at the Port of Los Angeles won’t happen overnight. However, with clear marching orders, companies, longshore workers, regulators and port authorities can begin pushing thousands more containers through the port each week.

“It’s not a single lever we can pull today to open up all the gates, but what we’re doing is trying to squeeze every minute, every hour of efficiency out of this port complex that we can,” said Port of Los Angeles executive director Gene Seroka.

“The work here will be fast (but) there’s no timeline when suddenly we will wake up and everything will be 24-7.”