High season soon, heavy imports to come

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Despite soaring inflation and declining consumer confidence, Port of Los Angeles executive director Gene Seroka predicts the US import boom will continue in the coming months.

“Although we are all cost-conscious and feel it at the pump and at the grocery store, we will continue to buy,” he predicted during a press conference on Tuesday, highlighting the more than 2 Trillion dollars in American savings. and $1.2 trillion in revolving credit.

Americans are not buying the same type of products as at the height of the pandemic. But “retailers continue to replenish inventory…sales of finished goods remain strong, and parts and components destined for US factories are equally impressive.”

“High season freight is on its way,” Seroka said. It expects an early start to peak volumes this year, “with arrivals beginning at the end of this month”.

It reported no impact on its port’s import flows due to the COVID shutdowns in Shanghai, which are now in their 12th week. “The number of ships leaving Asia has been very stable” throughout the lockdown period, he said. This week, 47 container ships left Asia bound for Los Angeles or Long Beach, according to Marine Exchange of Southern California data cited by Seroka. This is a 27% increase over departures in the first week of January.

Index: January 2019 = 100. The booking data index based on the scheduled day of departure shows that cargo TEUs to the Port of Los Angeles are on par with bookings in the same period last year. Chart: FreightWaves SONAR

3rd best month of my life

The nearby port of Long Beach has already reported exceptionally high numbers for May. Los Angeles followed suit on Tuesday.

May’s total throughput was 967,900 twenty foot equivalents, making it the third best month in port history, behind only May 2021 and October 2020. May’s throughput was 21% above the 2017 average- 2021 for this month.

Los Angeles handled 499,960 TEUs of imports, 20% more than the previous five-year average. Exports reached 125,656 TEUs, up 14% year-on-year to the highest total since November 2020.

Empty containers reached 342,285 TEUs. “Imports remain high from Asia into Los Angeles, and the need for [empty] containers to spin them quickly in Asia is strong,” Seroka said.

Looking at the combined monthly imports of Los Angeles and Long Beach, 2022 remains almost exactly on track with 2021 – and well above the 2018-2020 trends. The two ports’ combined imports in January-May are essentially flat year-on-year (down 0.5%, from just 23,316 TEUs).

chart showing imports through the Ports of Los Angeles and Long Beach
Chart: American Shipper based on Ports of Los Angeles and Long Beach data

“As expected, we tie the box record of the year 2021 for the box,” Seroka said.

Upcoming challenges for Los Angeles

If Seroka is right — and imports don’t fall off a cliff amid economic headwinds — the second half will be tough for supply chains. Several performance indicators remain problematic.

On the plus side, the Southern California ship queue is getting shorter. There were 27 container ships waiting to dock in Los Angeles or Long Beach on Tuesday, down from a high of 109 in January.

On the negative side, the 30-day average of cargo leaving the docks is 179,000 TEUs, compared to over 200,000 TEUs recently. The street dwell time for containers and chassis is nine days. Normally it is 3.5 days.

The rail situation at the quayside is particularly problematic. There are now 29,000 containers at the terminals waiting for a train; 15,000 of them have been waiting for nine days or more. Normally there would be around 9,000 containers, with none waiting longer than nine days. As recently as February, no container waited nine days or more, but since then rail freight has increased sixfold.

Asked about container dwell times which are stagnating and not improving further, Seroka replied, “Right now it’s all about rail. We are working hard to catch up with this rail freight.

Yet another possible challenge for the high season: the fallout from contract negotiations between the dockworkers’ union and their employers. The port labor contract expires on July 1. The two sides released a joint statement on Tuesday saying a deal was unlikely before then – the deadline will pass – but cargo operations will continue.

“Neither side is preparing for a strike or lockout, contrary to media speculation,” they claimed.

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