Port of Los Angeles’ Seroka sees no cargo surge

The expectation that US ports might see a surge in cargo volumes after the Trump administration paused higher tariffs on China may not be realized, according to Eugene Seroka, Executive Director Port of Los Angeles.

Seroka was speaking at the Agriculture Transportation Coalition (AgTC) Annual Meeting in Tacoma, Washington on June 17th, in which he said: “Because of continued uncertainties, I don't see a huge surge coming our way for three weeks down the line from now. We see pretty moderate levels of cargo flow, mostly scooping up what had been produced at the time when tariffs went up to 145% in China, and then afterwards, from) purchase orders that had already been in motion. Those contracts will be honored, but retailers pretty much have cooled their heels on new purchase orders because of the whipsaw effect of information coming out of Washington and other sources. Not sure if that policy will change in two hours, two weeks, or two months, so let's not get too far ahead. Volume last month was the lowest. It's been in more than two years. Front loading took place for about 10 months.”

Seroka said he does not expect a turnaround in import orders to meet recent holiday seasons demand: “The cycle for a purchase order on the import side, and again trying to generalize a little bit, is about 90-days ( and means that) for holiday season cargo, if purchase orders aren't in by July 1, they probably won't be in … further giving some credence to the fact that we're not going to see some big, big bell curve of product coming in.”

Seroka noted that “We have right now about 125,000 companies that call Los Angeles home for their import business every year. Again, it's difficult to generalize, but small to medium-sized companies are dipping a little bit into cash to pay for products at a higher level right now. And an effective tariff of 55% from China is still 55%. That means the cost of a product coming out of China is one and a half times more than it was going back a couple of months ago.”

Better Prepared for Cargo Surges

Seroka said that after the cargo surges during the COVID pandemic, the Ports of Los Angeles and Long Beach learned valuable lessons about planning and organization to be better prepared in the event of a cargo surge: “We are learning every day, and we don't know what we don't know. We moved more cargo from July to December of last year, and then it carried on to the first four months of this year … more cargo than we did during the peak of the peak during COVID, or that next year, we averaged 927,000 TEUs per month. We didn't have one ship backed up. And I think it was because a lot of learning that we took from the COVID time, a few behavioral changes, like not letting containers sit for a long time, making sure rail cars, engine power and crews were available. Truckers now have an appointment system in Los Angeles.

It covers four out of seven terminals. I've seen an uptick of usage on available appointments now at 60% up from 50, and appointments made and kept were up to 89% in recent data that we published. So, there's some progress there as well. And I like the chances. But to me, the biggest thing is that for every four containers we move, it creates one job. And that drives families and communities, and economy narrow and wide across the country and the globe. It's a big deal.”

The Importance of AgTC

Seroka said the AGTC continued to play a vital role as had been evidenced at the conference earlier in the day by exporters airing concerns about carrier and terminal practices and suggesting solutions: “When the chips are down, people come to the AGTC Annual Conference and you could tell that we're all leaning from each other right now, trying to find better ways to do things, trying to gut it out.”

Seroka described the Port’s work collaborating with the Trump administration and federal agencies: “I sit on the U.S. Trade Representatives Advisory Committee. It's pretty special. We meet once a week and it's a small group of people in industry that try to help give the ground truth of what's happening to the Administration. And I will say this, that the people that work there, new policy folks, career staff, are working around the clock and they're trying their level best because never in our country's history have we tried to cobble together dozens of framework trade deals in a compressed period of time to come out the other side with trade policy. And I'm not going to repeat anything that's under what my level of confidence is given the clearances, but what I can tell you is this, there are about 34 countries in play, 21 have active files, 20 have a deadline of July the eighth or ninth or whatever the exact date will be. And the one China has that deadline of August 11th, 12th based on the start date. These are framework deals. They're not bilateral agreements with 5,000 pages of origin rules and technology quotes. They're also [have] not passed by legislatures here and abroad. They're an announcement that comes out on what's possible, what mood people are in, and how we can get trade going once again with a level of certainty. But we're going to keep chipping away and with 21 countries to deal with in less than 25 days, it's going to take some work, but nonetheless, a steady hand at the tiller. And we'll keep working on the basics and the facts on the ground to make sure the cargoes move.”