Biden to Visit Port of Los Angeles, Casting Inflation as a Global Problem

LOS ANGELES — President Biden is set to use the Port of Los Angeles on Friday as a backdrop to highlight his fight against inflation, delivering a speech about the efforts his administration has made to speed up the delivery of goods that has been disrupted by the coronavirus pandemic.

White House officials said Mr. Biden would argue that large price increases in the United States were part of a broader, global problem with inflation and that Americans were in better shape than their counterparts elsewhere because of a strong jobs market and a declining budget deficit.

But the visit to the nation’s busiest entry point for goods comes as he struggles to show progress on resolving global supply chain issues that are fueling inflation across the country.

The Russian war in Ukraine has disrupted flows of food, fuel and minerals, adding to pandemic-related shortages and delays in global delivery systems, and pushing inflation to multi-decade highs. Data released on Friday morning showed inflation picking up again, rising 1 percent from the previous month. Compared with one year ago, consumer prices rose 8.6 percent, the largest annual increase since 1981.

Mr. Biden is correct that soaring inflation is a global problem. In a note to clients on Friday, Deutsche Bank Research said the United States ranked 48th for its inflation rate on a list of 111 countries, just above the middle of the pack. But that is little comfort to U.S. households struggling with rising costs.

Persistent inflation has become a major political liability for Mr. Biden, and the White House has been hoping that appearances like the one at the port will cast the administration in a constructive light. But while some clogs in the supply chain look to be clearing, analysts say that trend may yet stall — or even reverse — in the months to come.

The U.S. logistics industry is heading into its busier fall season, when retailers bring in products for back-to-school shopping and the holidays. Chinese exports are also on the rise as an extended coronavirus lockdown lifts in Shanghai.

And, most crucially, dockworkers on the West Coast are currently renegotiating a labor contract with port terminal operators that expires at the end of this month. If they fail to reach an agreement, West Coast ports may see slowdowns or shutdowns next month that would delay deliveries and add to supply chain gridlock.

Over the past two decades, labor negotiations led to at least three such instances of slowdowns or stoppages that resulted in congestion and delays. In recent weeks, some companies that typically ship into the West Coast have begun routing some goods to the East or Gulf Coasts to try to avoid any logjams.

Gene Seroka, the executive director of the Port of Los Angeles, said he expected labor talks to go beyond the July 1 contract expiry date, but downplayed the risks to trade.

“It’s important to know, with all this cargo on the way, the rank and file dock workers will be out on the job every day,” he said.

“And the employers know they’ve got to get these products to market,” he added. “So we’re going to give these people some room. Let them negotiate in their space, and the rest of us are going to work on keeping the cargo and the economy moving.”

Mr. Biden has kept close relationships with labor unions and may hesitate to put pressure on dockworkers to conclude any talks. But a work slowdown or strike would be bad news for the administration, which has frequently come under attack about rising prices.

By some metrics, pressures on the supply chains have been easing in recent weeks. The average global price to ship a 40-foot container of goods fell to $7,370 as of June 3, down from a peak of more than $11,000 in September, though that was still five times higher than before the pandemic began, according to the Freightos Baltic Index.

Data published by Flexport shows ocean delivery times to send products from China to Europe and the United States have also dipped in the last month, though they remain twice as high as they were before coronavirus appeared.

But analysts say it’s hard to tell if these drops reflect a normal seasonal lull in shipping before retailers gear up for a busier fall season, or a bigger change for the American economy. Economists expect consumer demand for imported products to begin to flag at some point, as the Federal Reserve raises interest rates to try to cool the economy. But, so far, appetite for household appliances, garden tools, televisions and other goods has remained fairly resilient.

“We’re coming into the holiday shopping and back to school season, and retail demand is still relatively strong,” said Jonathan Gold, the vice president of supply chain and customs policy at the National Retail Federation. “There’s obviously concern about the impact inflation could have, but right now, we haven’t seen that hit yet.”

Phil Levy, the chief economist at Flexport, said that shipping times and prices had dropped somewhat, and that American companies were amassing larger inventories of goods that had been scarce through the pandemic. But it wasn’t clear what was driving the change, he said.

“Is this because people are being cautionary?” he said. “Is it seasonal? Is it a slowdown in consumer demand? You get put in the unsatisfying position of saying, ‘I need to see more data.’”

Mr. Seroka at the Port of Los Angeles insists that he hasn’t seen consumer demand fall yet. The port recorded its busiest first quarter in history this year, and its second busiest April. On Friday, it is scheduled to announce new figures on the cargo it processed in the month of May, which Mr. Seroka said would be “sensational.”

The port was expecting an “earlier than normal peak season,” Mr. Seroka said, as volumes out of China rise as lockdowns lift, and as retailers bring fall products over earlier to avoid supply chain slowdowns.

“As inventory levels improve for appliances, furniture and maybe fixtures, you might see a little bit of softening in those segments,” he said. “But the retail goods we’re buying at the big boxes, the home improvement store, even our neighborhood hardware stores, continue to be extremely good.”

A slowdown was “not happening in my neck of the woods,” he said.