Backlog of ships outside Los Angeles/Long Beach ports down by two-thirds, import cargo volumes expected to slow in coming months

The head of the U.S. Port of Long Beach said he sees no decrease in import cargo volumes at the Los Angeles/Long Beach port, although there may be a slowdown in the coming months as high inflation and growing service spending may dampen consumer demand for goods. In an interview Wednesday, Port of Long Beach Executive Director Mario Cordero said total containerized cargo handled by the port in March looks "pretty good" and will report the results in the coming days. The Port of Los Angeles/Long Beach handles more than 40 percent of all containerized cargo entering the United States. The Port of Los Angeles/Long Beach's terminals are facing congestion and equipment shortages due to the influx of consumer goods and long lines of ships waiting to load and unload outside the port. While the number of waiting ships has dropped by two-thirds from January's record levels, the Russia-Ukraine conflict and soaring inflation are adding uncertainty to a still-strained global supply chain. Backlog of ships outside Los Angeles/Long Beach ports down by two-thirds, import cargo volumes expected to slow in coming months Meanwhile, epidemic closures in Shanghai, Shenzhen and other Chinese cities are causing bottlenecks in growth along the coast, which could lead to more delays and higher freight rates for commodity shipments in the coming months. As factories and logistics operations recover from the shutdown, commodities coming into the U.S. could be in disarray again, Cordero said, adding that he is closely monitoring the new crown epidemic situation in China. He is particularly concerned about the port of Yantian in Shenzhen, where many of the port's containers go through Southern California ports. Cordero said soaring inflation could cool U.S. consumer demand, but he has yet to see signs of that at the port. In addition, he is watching increased spending by Americans on services and entertainment, which could affect spending on goods, and the Russia-Ukraine conflict, which is "a disruptor of the global supply chain. Cordero said he is "optimistic" that the upcoming negotiations between longshoremen and their employers will be resolved without any major disruptions to port operations, as both sides will realize it is in everyone's interest to reach an agreement. Although Cordero was not directly involved in the negotiations, he said his impression from his conversations with the parties is that he does not anticipate a repeat of the 2014-2015 contract negotiation situation, which dragged on for months and led to transportation bottlenecks. Backlog of ships outside Los Angeles/Long Beach ports down by two-thirds, import shipments expected to slow in coming months Negotiations to finalize new labor contracts for some 22,000 West Coast dockworkers (represented by the International Littoral and Warehouse Union) and maritime companies and port operators (represented by the Pacific Maritime Association) will begin in May before the current contracts expire on July 1. Two years of record consumer demand, which has led to delays and congestion in port cargo loading, has also generated record additional revenue for container shipping companies , while giving dockworkers additional bargaining power given their influence on global trade. While wages and benefits are often the sticking point, the right of employers to automatically enforce some operations can become a particularly thorny issue. Since late 2021, large ships bound for the U.S. have increasingly been shifting to the East Coast because of severe congestion at U.S. West ports. That's not a trend he's concerned about, Cordero said, adding that increased shipments to East Coast and Gulf of Mexico ports were the norm before the outbreak and are expected to continue to increase this year through the Los Angeles/Long Beach ports. While ports in the eastern U.S., such as the Port of Charleston, may be experiencing record throughput, they are also facing congestion. Large importers may be spreading out shipments to prevent disruptions due to labor negotiations. Shippers are taking bets," Cordero said. For those who think union negotiations will go on for a long time, they have to make a business decision, but it's not easy to calculate right now."