Port of LA’s Seroka: “on pace to exceed 10 million” TEUs In 2024

The Port of Los Angeles processed 884,315 TEUs in November, a 16% increase over the previous year and so far in 2024 has moved 9,375,735 TEUs, 19% ahead of its 2023 pace: “We are well on pace to exceed 10 million container units for only the second time in our 117-year history,” said Port of Los Angeles Executive Director Gene Seroka.

Tariff Impact

Seroka said forecasting becomes more challenging “as we wait to better understand what trade policy may look like on the subject of tariffs. Some experts say that the earliest implementation date could be the summertime (2025) or maybe even into the third quarter of 2025. So, after an extended period of front loading, what we may see is an eventual drop or decline in volume similar to what we saw when tariffs first took effect back in 2018. We have some experience in this area. The bottom line, the concern and unpredictability surrounding tariffs will likely dominate our discussions about global shipping.”

Imports & Exports

Seroka noted: “On the import side, we led the way here with 458,000 TEUs. That is a 19% increase compared to last year. The key driver of this growth is the underlying strength of our nation's economy, which continues to boost consumer spending …A few geopolitical issues that have led to increased cargo movement through Los Angeles. These include the unresolved labor contract negotiations on the East and Gulf Coast, as well as frontloading of cargo is a hedge against potential tariffs and the ongoing security concerns in the Red Sea.”

Shifting over to exports, Seroka said: “Los Angeles handled 124,000 TEUS, 11% more than last year, and since there is so much room to boost American exports, we are making a considerable effort in this area. Just a few weeks ago in our nation's capital, I met with Secretary of Agriculture Tom Vilsack. We discussed strategies with growers and ranchers among others to expand U.S. exports through the Port … Our focus has been on leveraging the surplus of empty containers and better positioning them for our AG exporters. We are starting to see some early success. Just last week, Con Global launched a container depot at the new Wonderful Industrial Park in Central California. This new logistics center equipped with containers and chassis will enable faster and more efficient exports from the Central Valley down here to the Port of Los Angeles. In addition, this new facility will soon introduce a rail component, which will further improve export efficiency here in L.A.”

Shift From China to S.E. Asia

Seroka noted that there has been a shift of imports away from China and more from Southeast Asia: “The component of China business with the Port of Los Angeles has dropped from 57% at the close of year 2022, now down to 43%, yet we're still growing. Our business is up nearly 20%. And that is because … we have been chasing the cargo following our customers …And the liner shipping companies are starting to put more nonstop services in from Southeast Asia locations.”

Impact of East and Gulf Coast Labor Situation

Scott Kelly, Vice President of Ocean Services, The Americas, for Expeditors International joined Seroka at the media briefing. Kelly discussed tariffs, East and Gulf coast labor issues. “If you look at the East Coast … the cargo that moves through the East Coast, you've got … ports in Europe, South America, as well as the Indian trade sailing to the East Coast … So, our job is to provide our customers with options through Canada, Mexico, air freight other services anything we can do to (or) to give our customers the option to either shift through … another location (on) the West Coast. Customers that had already built a model in have adjusted and moved to the West Coast a little bit. We are already seeing some of that, but other than that, we're not seeing a mass migration yet.”

Red Sea Delays

Kelly also noted delays in shipping to the East Coast caused by attacks on Suez Canal shipping: “The Red Sea situation has consumed a lot of the extra capacity that was in the marketplace. A great example would be the new alliance between Hapag Lloyd and Maersk is going to require another 40 ships … Transit times have been extended anywhere from eight to 15 days depending on the destination. And the fact is, is that the schedule integrity has dropped significantly. It's down around 50% for the marketplace. So, our customers are building a little extra time into their models and they have adjusted.”

Port of LA and Automation

Seroka discussed the impact of automation at the Port of Los Angeles and Long Beach: “So, three of 12 terminals have an automated environment. And it's interesting because only about 5% of the 360 ports … around the world, have some semblance of automation. And they traditionally have been opened up in areas of rural communities where you don't have a very large workforce … But here we have equipment that moves the cargo on the terminal tarmac and some of the vernacular is known to many of us, but not so common to the public: automated stacking cranes, auto straddle carriers, rail mounted gantry cranes are the products of choice here in L.A. Over at Long Beach, there's an automated guided vehicle concept … Some have opined that productivity is not that great, but costs have been dropped, and longer hours of operation can be attained using this robotic mechanism. On the other side, during negotiations that date back to 2008 that put this language in the collective bargaining agreement with the ILWU, maybe some promises have not been lived up to, and maybe job cuts being replaced by these robotics or automated machines have been deeper than what was anticipated. Yet longshore work here in Los Angeles and Long Beach is up about 32% over the last decade.”

A means of re-training workers for changes is a new training center at the Port of Los Angeles: “We've said many times we cannot leave the worker behind. And that's why we're investing real money, time, and effort in the nation's first goods movement training campus … a safe and secure environment that longshore (workers) can work at to learn their craft and skills, build hours to become registered members of that great union …. training and truck driving, warehousing, even coding for people who understand and especially the younger generation, how all this computer technology is going to work to make our supply chain better.”

BNSF & UP Rail Dwell Times Improve

Seroka noted that rail dwell times for the Union Pacific and Burlington Northern Santa Fe railroads have improved: “… Even going back six, seven weeks ago, (the) rail dwell time was at nearly eight and a half days. Today it is under four and a half. We had more than 8,800 containers, aging nine days or longer. A measurement we now keep in this industry. Today that number is down to about 1500 containers. So, we have seen both the Union Pacific Railroad and the BNSF railway working around the clock trying to help solve these issues with engine power crewing and rail cars trying to match up imports and exports better than ever.”

Increased Trade with Mexico

Seroka does not believe that the increase in container trade from China and the Mexican ports of Manzanillo and Lazaro Cardenas is hurting the Port of Los Angeles. He says there has been a boom in manufacturing in Mexico leading to increased exports to the United States and also in the opposite direction: “We see a surge in Mexico's manufacturing sector, whether it be in the automotive segment, appliances, electronics … there's a real boom happening. And Mexico has overtaken China for the first time in 20 years to be the United States largest trading partner. What I do not see are China finished goods coming through Mexico to get into the United States. These (imports) are typically inputs that go into the (Mexican) manufacturing sector. And here in Los Angeles, as I've reported, we're enjoying some of that business as well, whether it's cargo that comes into LA and then trucked down to Mexicali on the Baja Peninsula or taking double stack train over to El Paso to cross … into Juarez or continue on into Nuevo Laredo crossing it at Laredo, Texas, which is the largest land-based port in the nation. So, we have got a lot of opportunity here to share in this growth and the uptick in manufacturing. And there is still a lot of discussion about what tariffs may look like for Mexico goods. The average product that has inputs coming to it for manufacturing of a finished good in Mexico transits our border with the United States and Canada seven times on average, according to the Dallas Fed before that finished product is ready for sale. And that's part of the U.S.M.C.A. (U.S. Mexico Canada Agreement) which is the updated NAFTA (North American Free Trade Agreement) … So, there's a lot of upsides here and a lot we have to take into account, but we're not being left behind. There is much work to do in helping Mexico grow, which will also help the U.S. economy grow.”