romaine: from bloomberg world headquarters in new york, i am romaine bostick. getting some breaking news on jay powell, scheduled to testify on capitol hill tomorrow. relief -- we are getting embargoed release of some of what he plans to talk about. he basically said inflation remains elevated, it is to remain so. he also says bottleneck affects

are larger than expected. he also says the economy's path, the risks to the outlook remain. he also said the fed will do all it can to support economic recovery. these are the prepared remarks that he plans to deliver tomorrow when he goes on the hill and i believe treasury secretary janet yellen will be there as well. taylor: i think what is interesting is we have been hearing this from the markets. a little bit less transitory than we thought. i know our conversations in the coming and it's will be about some of the bottlenecks and supply chain issues but because they are larger and more persistent than expected indeed is a big deal. let's do this all with bloomberg's mike mckee. are you surprised that they continue to say inflation is a little bit less transitory? the core numbers, they continue

to rise higher but then they keep saying it is transitory. mike: it does appear to be longer-lasting they had anticipated. powell is admitting the obvious. everyone can see that. upward pressure in prices, which are larger and longer lasting than anticipated. he goes on to say that they will abate and inflation will drop back towards the longer run 2% goal. they say bottleneck difficulties, other constraints could prove to be more enduring than anticipated. he goes on to say that we would react in that case and he is leaving himself some runway for being wrong. taylor: what do we know about what he is going to say about jobs and the progress that has been made and not made in

certain areas in that market? mike: similar to what the fed said on the 22nd in the conclusion of their meeting. that labor markets are tightening up, still a lot of people on the sidelines who have not come back into the labor force. so the unemployment rate is higher than the official numbers that we get. the fed is consistently concerned about -- the fed will do its best to continue to support the economy and grow employment. romaine: everything we have heard from him over the past few months has been relatively consistent here with regards to his messaging has not necessarily been consistent with the way that other people see things, with regards to ceo's, money managers, and the people on the ground. they seem to be looking at some

of the wage pressures, inflationary pressures, and the labor market overall is being a bit fragile here. i wonder if there is something the fed and policymakers, that they have it right and the rest of us have it wrong? mike: they are looking at a much broader set of inflation indicators than the average ceo, was looking at prices he has to pay for inputs into his goods and what he has to charge to make up the margins. what they are looking at his various price -- various categories for price increases. many of them are casualties of the reopening and that they should start to go down. we did see that in the last ppi report. the problem is that some of these bottlenecks, especially some of the raw materials that companies use, are proving more persistent. it is getting harder to get some

of them to ramp up production to meet demand at this point. the question is, for the fed, do these inflation pressures last long enough that people begin to ask for a second round of price increases? that is what they are going to ask for. taylor: of course, we are all focused on the breaking news about rosengren and kaplan. some of the supply chain issues in the bottlenecks. qe does not fix bottlenecks. it does not make people get vaccines. what does it do -- a little bit out of the purview? mike: the only thing the fed can do in reaction to this, if they were worried about inflation

rates, interest rates? at this point, that would risk the economy. at this point, you can read into that that they have made the choice to let the economy -- it is a calculated risk. as far as supply chains, not much they can do is -- can do except hope production continues to ramp up. even if they raise rates, if they stop qe, it will change investment decisions. taylor: we continue to focus on some of those inflationary pressures, the supply chain conversation. we will do that with the port of los angeles's executive director. we will be discussing some of the real-world effects. what did you think, 55, 56

ships? romaine: i was thinking it was 62. taylor: the port of long beach, 55 ships. romaine: my sofa is on one of those. taylor: that is my barbie doll floating on the pacific ocean. this is bloomberg. ♪

>> cargo is sitting for longer at the ports than normal as it is at warehouses. we need to speed the velocity throughout the domestic supply chain as well. in the international markets, looking at at least through february, march. i think it will go long after that, getting the backlog

resolved. i think that mystically, we are going to have ups and downs for the next year. romaine: some of the commentary we have been hearing about a lot of supply chain constraints. we have been talking to people at the port of los angeles about the bottleneck. i want to bring in the ucla anderson school associate dean of global initiatives, with standing by with ed ludlow at the board. >> the professor has written volumes on the issue of global supply chains. let's start by discussing the severity. not just here outside the port of l.a., but across the united states. how bad is the situation? >> i think this is really unprecedented in the entire history. basically, that we have never encountered such a perfect storm.

on one hand, the demand surge and also the supply. ed: are things fundamentally wrong with how the supply chain is set up, or are these short-term factors? christopher: i think it is both. in the short-term company containers created the demand surge this year because the demand plummeted last year, so accumulated this year. for the supply side, there was also disruption through the entire world. china had to shut down because of covid and quarantine. also, other asian countries such as vietnam suffered from a lot shut down as well. there is the supply capacity and limitation as well. taylor: i am curious if there is anything we can take away from this time that will allow us to manufacturer and do more on shoring, at least with some of

the medical devices in urgent need. do you see that happening? christopher: thank you. this is a very important question. in terms of reassuring back to the united states, it would take a long time to make it happen. i understand the biden administration is trying to launch the build back better program. but because the manufacturing capability has hollowed out over the last two decades. it is not going to happen in days, it would take years to build back. romaine: there is a lot of talk about the imports that are out there on ships, trying to get into this country. there are also a lot of producers here in the united states that are trying to export their goods out of the country here. how much of that is being affected by the congestion at the ports? christopher: right now company pressing 80 are focusing on the

ports, but i think they need to look at the entire system. right now, we need to take a step back. why is the port so congested. it is present -- it is because the containers cannot move, we do not have enough warehouse spaces, we don't have enough truck drivers, we don't even have enough containers. it is the entire system. ed: professor, you have done large bodies of work on global trade. not just on supply chain, but the dynamic import-export between the united states in the rest of the world. has this pandemic exposed however long it united states is on other countries, not just the high-tech equipment and semiconductors, but other industries. christopher: absolutely. in terms of the trade war starting in 2018, there is empirical evidence that shows that trade wars did not reduce

the trade deficits for the world. the trade deficit between the u.s. in the world has actually increased. the question is why? the united states cannot build the tech capacity or capability. full c in time whether we can actually build back better. ed: what policies do you want to see from the bided administration to fix these problems long-term, definitively? christopher: i think it is time to take a step back to understand what are the key ingredients we need to rebuild manufacturing capabilities. for example, the semiconductor industry, the united states used to have 30 manufacturers producing the chips. today, only three left. government, would that be sufficient? yes and no. you need to have the university, the companies to work together to coordinate and have a plan actually to rebuild in our

country. ed: i drove through california's central valley over the weekend. hundreds of miles of farmland, old, rusting rail networks. what is the bigger problem? see containers or united states rail infrastructure? christopher: i am afraid both. at the ports, we are not operating 24/7, and also the coordination between the truck drivers and the rations, they are not coordinated. that is why there is friction. at the same time, our infrastructure is really outdated. taylor: well said. christopher tang, ucla anderson school senior associate dean of global initiatives with ed ludlow. walking a very fine line, going down the 99 from fresno, stockton, bakersfield.

glorious farmland. sonali: are you from california? romaine: you not watch the show? taylor: we need that high-speed rail. we are going to discuss that next. in the meantime, we are going to continue some of the conversations we have about the supply chain. this time, we are going global. we are going logistics, freight, trucks. the ceo of a global logistics company is craig fuller. where is he seeing the disruptions and how to solve them? this is bloomberg. ♪

taylor: today, we are focused on all things supply chain. jay powell saying that bottleneck affects our larger and more persistent than expected.

you go across the pond and you do see examples of some of these disruptions. earlier, we were talking about even the prime minister of the u.k., boris johnson, trying to do something about these fuel shortages, even deploying the army. just incredible, not only the fuel shortage but the lack of truck drivers. romaine: shortage is not necessarily a shortage of fuel. it is a shortage of people who transport that fuel. now you talk about the u.k. considering bringing drivers from the army to help out with this. immigration issues, the lack of visas from people who would normally take this job. it is really, obviously this is going on in the u.k., but it is emblematic of the u.s. and other countries. once you get things into the country and off a ship, you still need people to get it off

a port to wherever the endpoint is going to be. craig fuller covers this stuff and understands how this works more than we do. he is the ceo and founder of freight weight. he founded a division of u.s. express enterprises, the largest provider of on-demand trucking services in north america. we started off the show at the port of l.a., talking about the ships waiting to get into the port. once the ships get unloaded, there is still sort of the issue of getting those goods on rail, on trucks to the final delivery point in the store or are living room. how are we looking here in the u.s. in regards to our ability to do that when it comes to cost? craig: not very well. we certainly have an efficient supply chain. over the past year, there was so

much stimulant that stimulus money, yet orders still piled up. we are still dealing with the ships off the quote -- off the coast of california, new york, new jersey. there is a significant backlog all over. even if we did not have those backlogs, we would not have the freight capacity. even getting them on shore does not necessarily move it to where it needs to be. sonali: you have a very unique view of the market and the way things move. if -- ordering people facing these backlogs and shorter time frames -- what can you telegraph for them that they can expect over the next couple of months? craig: expect the unexpected, or freight that is not going to arrive. i have been telling friends and families and clients that they need to think about ordering for

the holidays right now. if you wait until black friday, they are not going to find those items in stores. the same thing goes for businesses. i did they have to pad their time to give themselves enough leeway in terms of getting cargo in there. the second thing, as it relates to businesses, there has been this issue of supplier concentration and geographical concentration, where companies with source products may be from just china, just asia. one thing we recommend is that a company build resiliency of sourcing products from multiple parts of the world, some of that domestic but also places like latin america, even parts of africa that can source items that are not as exposed to what we see in the pacific trade lanes. that resilience is going to be really obvious when we get to the first quarter and look at earnings reports where some companies are going to do exceptionally well and other

companies will completely miss their numbers because they simply did not have inventory. taylor: i was just hearing from i believe fedex within the past week, raising prices on average 5.7% to almost 6%, i believe effective next year, to take advantage of this and to get ahead of this. does that alone solve the problem? to try and control and get what you can? or is that just exacerbating the problem? craig: their costs have gone up and they are trying to pass those costs on without losing volume. they are in a competitive market and they basically will raise rates as their competitive stupid 6% is on the lower end of cost increases. you look at ocean shipping, the most extreme examples of price acceleration, from 300% to 500%. trucking has seen as much as

200%-300% increases. not all of that is in every shipment. but even in the trucking get, we are expecting double-digit rate increases. what is unfortunate for the trucking companies, a lot of that is helping them ages, cost increases, etc.. well they may be able to raise rates, they are not able to keep a lot of that income. on the ocean side of the world, those companies are hitting record profits. if you look at it, more money has been made this year than they have made in the past. romaine: we have heard from some companies saying they have started to use airplanes to get some of their stuff from overseas. these are products that do not have a complete what you would need in terms of doing it by ship.

how viable is that for most of these companies? craig: it is always the upper end of the market. if you are looking at ocean shipping and air shipping, just a slight difference where it is not that different, the days thing about airfreight is that it is quicker, it is less prone to delays so that even if you can pumped off one aircraft, you can get to the next one. if we are talking about months of delays on the ocean, even airfreight, we are talking about a matter of days. you have heard stories of people taking plastic bags and putting them on airfreight, which makes no sense because in a traditional market, it is senseless to spend that kind of money. companies are using airfreight because it is far more dependable right now than any other mode of transport. taylor: freightwaves ceo craig

fuller, highlighting the intricacies between the supply chains and what it means for your prices, your christmas shopping, inflationary pressure. romaine: everybody says order now. taylor: they said order yesterday. romaine: i have got like two birthdays coming up. i should have ordered like five months ago? this is bloomberg. ♪

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>> from the heart of where innovation, money, and power collide. in silicon valley and beyond. this is "bloomberg technology" with emily chang. ♪ emily: i am emily chang in san francisco. coming up in the next hour, instagram taking a pause on the kids site after continuing concerns about the platform's impact on teens and children. parent company facebook is