After two years of unprecedented cargo volumes, goods movement through the San Pedro Bay ports has declined. But that isn’t cause for alarm, officials say.
“We have got to keep it in perspective,” Port of Long Beach CEO Mario Cordero said in an interview, noting the pandemic surge over the last two years was an anomaly and that operations have now “normalized.”
Some of the decline, of course, is due to issues that have caused cargo to be diverted to other ports around the country. Historic congestion and a 1.5-year-long labor dispute were the primary sore spots.
In May of last year, dockworkers and their employers began negotiating a new contract, which expired two months later. Negotiations dragged on for months, with workers staging various work actions that caused slowdowns and sometimes brief stoppages.
Finally, on Aug. 31, union workers voted to ratify a six-year contract.
Even before the labor issues, the twin ports of Long Beach and Los Angeles faced a historic bottleneck that saw upward of 109 container ships waiting for their turn at berth. From October 2020 to November 2022 (with a peak in January of last year), the backlog plagued both ports.
As those two periods of hardship fade into the rearview mirror, where will the Port of Long Beach go from here?
“We are vastly improved that from that scenario,” Cordero said.
But the two issues that caused harm will take time to recover from. Namely, the diverting of ships to other ports around the country.
Those diversions forced Long Beach, the second-busiest port in the nation for decades, to move down the podium to third behind the Port of New York and New Jersey last year. The two ports have been neck and neck this year, with positions changing regularly month to month.
Through July, the most recent month of data available for both ports, Long Beach trailed the East Coast port by about 150,000 20-foot-equivalent units, or TEUs—the standard measure of shipping containers.
“Even though we’ve had cargo decline, the West Coast ports have gained a small percentage back,” Cordero said.
Together, the ports of Long Beach and LA moved about 1.43 million TEUs in May, which was the busiest month since October of last year when the port moved 1.45 million TEUs. In June, that figure dropped to 1.2 million, and in July it was 1.3 million.
Last month, however, the twin ports moved a combined 1.51 million TEUs, data shows, which indicates a small return of lost market share, Cordero said. East and Gulf Coast ports, including New York-New Jersey and Savannah, meanwhile, have lost volume, he added.
Cordero said it is going to be an ongoing challenge to regain the lost market share. But, while entirely speculative at this point, Cordero said he is confident that the San Pedro Bay will retake the “majority” of what was lost.
For years prior to the pandemic, the twin ports were experiencing fairly steady increases in cargo volumes. As the population grows, after all, more goods are needed to meet demands. Now that the ports have returned to pre-pandemic norms, Cordero said volumes will continue to grow in the coming years.
“[The San Pedro Bay ports] may not be moving 40 million containers in the year 2040, but we’re certainly going to be moving a significant number above 20 million,” Cordero said, noting the ports’ busiest year ever was 2021 when they moved a combined 20 million TEUs—which caused the significant bottlenecks.
Regardless of the exact number, volumes are going to rise, which means the twin ports need to focus on speeding up the movement of goods.
“Rather than talking about how to get more cargo today, let’s figure out how we move 20 million TEUs without congestion and bottlenecks,” Cordero said. “That should be the focus.”
One way to ensure the ports can keep up with growing cargo volumes is by transitioning terminal gate hours to a 24/7 model, operating hours that are common at ports in China, but do not exist in the U.S. The ports, however, cannot make the transition alone; it requires the entire supply chain, from trucking to warehousing, to also shift to operating 24 hours per day.
Cordero said it’s the “Amazon state of mind”: people want their goods now. They do not want to wait five to seven business days. Consumer expectations are higher and the ports need to rise to the challenge, he said.
The conversation around 24/7 port operations will likely gain more steam toward the end of the decade, he said.
Cargo volumes, though, are not the only metric of success Cordero will be watching in the coming months and years.
“One of the issues that has played out at the San Pedro Bay gateway for over a decade is the whole question of the environmental impact that this economic engine has on neighborhoods and communities,” Cordero said.
For years, the ports have worked to reduce emissions and have had great success in many areas. But the historic cargo volumes and backlogs also meant a spike in emissions in 2021. But last year, levels came back down, according to a new report, and are expected to continue to decrease as the port invests more in green technology.
“We’ve been on the cutting edge and reducing emissions more than any other port gateway in the country,” Coredero said of the San Pedro Bay.
On a grander scale, beyond direct impacts on nearby communities, port emissions contribute to the larger issue of global warming, which, in recent years, has led to more extreme weather phenomena around the world. In addition to the health and well-being of humanity, climate issues directly impact the shipping industry.
At the Panama Canal, for example, water levels did not recover enough as the end of the rainy season draws near. Due to the ongoing drought, limits on daily transit and vessel draft will remain in place the rest of this year and throughout 2024, the Panama Canal Authority announced earlier this month.
If the issue at the canal is prolonged, it could actually be a positive for the San Pedro Bay ports, Brian Bourke, global chief commercial officer for SEKO Logistics said, noting that ships that cannot pass through the canal could be diverted to West Coast ports.
“It’s not adding a lot of pressure today, but it’s adding risk that wasn’t there before,” Bourke said. “People that run supply chains for companies, they don’t like risk.”
Another growing problem in the industry is the loss of containers at sea, John Konrad, the CEO of the shipping site gCaptain, told The Atlantic last year.
“The weather is getting more unpredictable, and these ships are getting bigger, so they’re stacking higher,” Konrad said. “When the ships get hit in a wave, you get a bigger lever that’s pulling the containers over.”
Moving forward, port staff needs to be laser-focused on growing cargo volumes, while decreasing emissions, Cordero said. Ultimately, the port has the goal of zero-emission terminal and trucking operations by 2030 and 2035, respectively.
The port’s largest active project to reduce emissions is the nearly $1.6 billion Pier B On-Dock Rail Support Facility. Once completed early in the next decade, the port will be able to move significantly more cargo by rail, removing tens of thousands of truck trips per year (one double-stacked train eliminates 2,000 truck trips).
“Parallel to our endeavor is the BNSF [Railway] Barstow International Gateway,” Cordero said. “The connectivity of that rail is huge, which means we’re going to be able to move containerized cargo even faster.”
Reporter Alicia Robinson contributed to this report.