By Eric HUang        Photo：Jose Parra

The Ports of Los Angeles and Long Beach are among the busiest ports in the United States, handling large volumes of imports and exports each year. These ports have been one of the main hubs of global trade for the past few decades but have faced various challenges in recent years. Container volumes at the ports of Los Angeles and Long Beach have been falling as the trade war intensifies and the global economy slows. In February 2023, container volumes at the ports of Los Angeles and Long Beach fell again, setting new lows. According to local media reports, the two ports together handled less than 500,000 TEU of containers in February, down to 487,846 TEU, down 43% year-on-year. Throughput in February was down 33% from January and 31% from pre-COVID February 2019. A decrease of more than 10% compared to the same period last year. The figure is worrying because it means that trade activity at the two ports is gradually slowing down, which could have a negative impact on the local economy.

Many analysts believe the decline in container volumes at the ports of Los Angeles and Long Beach is largely due to the SINO-US trade war and a slowing global economy. These factors have made international trade more volatile, and many companies have had to relocate their global supply chains. It is common for container volumes to decline in February as it is a shorter month and is often strongly influenced by the timing of the Asian Lunar New Year holiday, but much of the decline this time was due to broader reasons for slowing demand, causing many schedule container liners had to cancel their sailings or skip calling some ports for operation, which further exacerbated the decline in container volume. Sixty-one container ships called at the Port of Los Angeles in February, compared with 93 during the same period a year ago. Shipping lines have canceled 30 sailings in their regular schedule and there are now more container ships lying idle than at any period in the past few years.

Gene Seroka, executive director of the Port of Los Angeles, emphasized in a monthly briefing last week that the economic slowdown is a global phenomenon, while saying, “There is no demand right now.” Seroka highlighted several factors that suggest economic uncertainty is playing an important role, and consumers continue to feel the effects of inflation, although he noted that the main issue that must change before things improve is high inventory levels in U.S. warehouses. “Old inventories are just not moving fast enough,” noting that retailers especially need to clear levels before the next wave of imports can begin.

Another reason for the sharp drop in the volume of imported containers at Southwest ports is that during the pandemic, many importers who originally had only one import warehouse or distribution center in the Southwest port were forced to work with another distribution center at the East port to ensure that the goods can enter the United States smoothly and be delivered to domestic customers. In the post-pandemic period, they choose to continue to stay in the distribution center in the East port, if their major customers are in the east part of the United States. They've built new supply chains, and they're not necessarily more expensive. While international shipping costs have increased, domestic truck costs have relatively decreased. On top of that, the difference in ocean freight rates between the US East and the US West is currently very small, even as low as $800 per forty-foot container, which is almost unheard of, compared to the cost of shipping goods across the country by truck, It's nothing at all.

Labor uncertainty among port workers in USWC has also prompted some importers to reroute shipments to East Coast ports, including New York/New Jersey, Savannah, Georgia, and Mobile, Alabama. U.S. Labor Secretary Marty Walsh, who has been actively pushing the two sides to reach an agreement, announced in February that he would leave the Biden administration to become executive director of the NHL players union. Some worried that his departure would affect contract decisions, but President Biden said he plans to nominate deputy labor secretary Julie Su, a former California labor secretary, to step in because she knows ILWU and PMA well and knows the port business on the West Coast. Believe that the labor and management will continue to work on the agreement in good faith and strive to reach the "spring agreement" as soon as possible!

Economists and analysts expect trade to rebound in the second half of 2023. March volumes are expected to be up 20% from their February lows, with volumes continuing to pick up mid-year. The National Retail Federation echoed a similar outlook in its forecast, saying they expect sales to start picking up in March, with a more positive outlook for the second half of the year. But whether the facts will go according to the predictions of those experts, it seems that there is no dawn yet ~

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