Cargo continued dropping in February at both the ports of Los Angeles and Long Beach as an uncertain economy and concerns over prolonged labor contract negotiations take their toll.
Warehouses remain full as goods sit with retailers waiting for a hoped-for uptick in consumer confidence.
“February declines were exacerbated by an overall slowdown in global trade, extended Lunar New Year holiday closures in Asia, overstocked warehouses and a shift away from the West Coast ports,” Port of Los Angeles Executive Director Gene Seroka said in his monthly virtual press conference on Friday, March 17.
While more cargo is expected to move across the local docks in March, Seroka said, “volume will likely remain lighter than average in the first half of 2023.”
The Port of L.A. processed 487,846 twenty-foot equivalent units — or TEUs, the industry’s standard of measurement — in February, a 43% decrease from the same month last year. The second month of 2022 was POLA’s busiest February of all time.
The neighboring Port of Long Beach, meanwhile, outpaced its larger neighbor last month, moving 543,675 TEUs, though that was still down 31.7% from February 2022, which, like LA, was that port’s busiest February on record.
“Trade continues to normalize following the record-breaking cargo numbers we saw at the start of last year,” said Port of Long Beach Executive Director Mario Cordero. “We are inviting in infrastructure projects that will keep us competitive as we collaborate with industry stakeholders to focus on our trade volume.”
Some signs are similar to patterns seen in the early days of the pandemic, Seroka said, which was marked by consumers hunkering down as stores and schools began to close.
Consumers followed that with an online spending spree that began in the second half of 2020 and only recently began to slow and stall as the pinch of inflation and other factors began to hit, Seroka said.
A “spring” labor contract deal is desperately needed to reassure cargo owners who have been sending business to ports on the Gulf and East coasts, Seroka said.
“We’ve got to bring more cargo back,” he said. “We’ve had cargo leave as many cargo owners continue to have trepidation about these protracted labor negotiations.”
The one year anniversary of talks beginning between the International Longshore and Warehouse Union, and the Pacific Maritime Association will hit in May.
“Cargo owners want the certainty of a signed deal,” he said.
“I don’t know that we’re any closer” to a deal, Seroka said. “But the two sides continue to meet in good faith.”
Trade typically slows in February as Asian factories close for the Lunar New year, Port of Long Beach officials said in a news release.
“Economists say the year started stronger than anticipated,” that port said, “but shifts in trade routes and increased prices driven by inflation contributed to a decline in shipments as retailers continued to clear warehouses.”
The slowdown, though, can have a silver lining, said Long Beach harbor commission President Sharon L. Weissman.
It “provides an opportunity to focus on long-term projects,” she said.
Better days are ahead, Seroka said, with increases in cargo likelyby mid-year as a more traditional peak season arrives — bringing holiday and back-to-school goods from overseas.
Retailers, meanwhile, are still pushing sales and discounts via text messages to consumers as they try to clear packed warehouses of old goods to make room for new merchandise, Seroka said.
“The second half (of 2023) should be better,” Seroka said. “By how much remains to be seen.”
