Cargo volumes at the Port of New York and New Jersey continued to eclipse goods movement through the Port of Long Beach through April, while Los Angeles held onto the top slot.
Last month, Long Beach moved 656,049 20-foot-equivalent units (the standard measure of shipping containers), slightly more than the 648,390 TEUs moved by the East Coast port. The volume, however, was not enough for Long Beach to catch up.
Year-to-date, Long Beach has moved 2,377,374 TEUs, compared to New York-New Jersey’s 2,439,449 TEUs. Los Angeles, meanwhile, has moved 2,525,094 TEUs this year, after handling 688,000 in April.
For all three ports, the first four months of cargo mark a drastic decline from the same period last year. The drop has been more dramatic in LA and Long Beach, which saw a 29.3% and 27.6% reduction, respectively. New York-New Jersey saw a 23.7% cargo volume reduction.
“The bright spot is, we’ve been on an upward trajectory these last two months,” Port of LA Executive Director Gene Seroka said during a May 18 press conference. From February to March, LA saw a 28% climb in cargo volumes, followed by a 10% increase from March to April.
“I believe this trend will continue in May,” Seroka said.
The same upward trend was seen at both Long Beach and New York-New Jersey as well.
There are several factors at play that have been keeping cargo volumes down, Seroka noted. First and foremost, he said the cooling economy and lingering inflation have pushed demand for goods down. With lower demand, warehouses remain full of aging inventory across the country, he said, which means companies are not bringing in more goods to restock shelves.
“We’re seeing mixed signals with no clear consensus on what lies ahead,” Seroka said. “The high demand for goods witnessed over the last few years has softened; on the other hand, the U.S. had a strong jobs report and both freight and energy costs are stabilizing.”
Two things could quickly destabilize the economy quickly, Seroka noted: if Congress fails to raise the debt ceiling, causing the country to default, and further interest rate hikes by the Federal Reserve.
For LA and Long Beach specifically, ongoing labor negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association—and several subsequent work actions—have spooked some shippers, which have diverted cargo to East and Gulf coast ports as a result. But Seroka said he expects an agreement to be reached sooner rather than later.
“I believe that we’re on the doorstep of a tentative agreement,” he said. “Both sides are spending a lot of time at the negotiation table, and I’m optimistic we’ll hear good news soon.”
Since August, the Port of LA has been operating at about 70% capacity, Seroka said. About half of that loss of cargo is tied to economic factors, he estimated, but Seroka said he has been told by importers and exporters that the other half is due to the turbulent labor negotiations.
The West Coast losing some ground is not unheard of. In fact, the West Coast has been losing market share for decades, Seroka said, as all ports continue to improve their operations and shippers diversify their supply chains.
Seroka said that, over the last 20 years, West Coast ports’ trans-Pacific market share has fallen from 80% to 56%, with importers and exporters “simply trying to de-risk.”
With the recent loss, however, the West Coast ports do expect to regain some of their recently lost market share once a labor agreement is reached, Seroka said. Once a deal is announced, he said it usually takes between 30 and 45 days for cargo allocations to shift.
“But nothing is guaranteed,” Seroka said. “So we’re going to be back on airplanes crisscrossing the country trying to talk to as many folks as we can, and make sure that we’re going after every pound of freight possible.”