The Port of Los Angeles announced in a wide-ranging press briefing that it has moved 691,475 twenty-foot equivalent units (TEUs) in June, a 9.6% decrease compared to last year’s record-setting the same month.
June loaded imports decreased 6.8% to 369,189 TEUs compared to the previous year. Loaded exports dropped 21.3% to 109,586 TEUs. Empty containers declined 7.2% to 212,701 TEUs. Specifically, the port mentioned that trade was falling short of the goals set in the Phase 1 trade agreement between the US and China, which is contributing to the declines in exports.
For the first half of 2020, overall cargo volumes have decreased 17.1% compared to 2019. As expected, automobile volumes turned negative due to the slowdown in sales, while scrap metal and steel volumes are hampered by tariffs, and petroleum volumes declined as fewer people traveled due to the pandemic and the stay home orders.
“Given the circumstances of an unresolved trade war and an ongoing pandemic, our June and mid-year cargo volumes are in line with our forecasting,” said Port of Los Angeles Executive Director Gene Seroka.
Despite the decline, the Port of Los Angeles is still moving 80 to 85% of its normal trade volume for this time of year and has not missed shifts due to the pandemic. Labor shift work, however, is down about 18% due to the lower volumes but has not outpaced the cargo volume declines.
The port points to a few developments that could signal a leveling off in volumes. Specifically, they are starting to see the evacuation of empty containers from the port preparing possibly for a modest uptick in imports. Over 200,000 empty TEUs moved through the port in June, which was down approximately seven percent versus 2019. Retailers they believe are starting to replenish distribution channels that could contribute to the import volumes. However, expectations are for continued soft consumer sales meaning that they are not expecting strong increases leading into the traditionally busy fall holiday retail selling season.
Seroka highlighted that the liner companies are balancing supply with demand leading to a leveling off in the number of vessel arrivals. In the first three months, the Port of Los Angeles experienced 40 canceled voyages, down to 23 cancelations in the second quarter. In both July and August, they are expecting just two canceled sailings per month.
For the year, the Port of Los Angeles announced that they were projecting 7.9 million TEUs in volume which would represent a 15 per cent decline from the 9.3 million TEUs that moved through the port in 2019. The port’s long-term goal is for 10 million TEUs, which Seroka feels could be achieved through opportunities in exports if the US is successful in fixing its current trade issues.
The focus remains on the longer-term issues necessary to slow the port’s decline in market share. The port has not been keeping up with national growth rates and since the work stoppage in 2002 has experienced a 20% loss in market share. Charges in trade and shipping patterns the port believes could contribute to an additional 15% decline as more goods flow from Southeast Asia via the Suez Canal to the US East Coast ports.
During the press conference, Seroka praised the Federal Maritime Commission and Federal Maritime Commissioner Rebecca Dye for suggestions to further improve cargo fluidity in the San Pedro Bay. He highlighted that the Port of Los Angeles is operating very efficiently with truck turnaround times averaging less than 60 minutes, the lowest levels in the eight years turnaround times have been tracked
He continued, “Our focus now is on enhancing the Port’s competitiveness with infrastructure, technology and operational efficiencies as we help get Americans back to work and drive economic recovery.”
The Port of Los Angeles is also well prepared to handle the larger container ships and in fact set a record for the number of containers handled from a single vessel in June. Initiatives are underway looking at both the port and the region’s competitiveness issues along with plans to further enhance the port’s position and longer-term to attract volume.