The Port of Los Angeles moved 1,042,652 TEUs in September which tops the Port’s previous monthly record and reflects “the strongest four-month stretch that we've ever had,” according to Eugene Seroka, Executive Director, Port of Los Angeles.
Seroka spoke at the Port's media briefing on October 9th where he ascribed the cargo surge to a number of factors: “Well, a few things came together all at once. Tariffs are lower than the levels we saw earlier this year. At last, giving importers more certainty on costs and allowing them to replenish inventories at a quicker rate. The American economy continues to move forward and consumers are still buying. Additionally, with continued challenges along the Suez and Panama Canal routes, more cargo is being allocated at origin for shipment here to Los Angeles, the fastest and most reliable route from Asia to markets across the United States.”
Shifting Cargoes from Gulf & Atlantic Coast Ports
Now, Seroka thinks that shift will be more than 5%.
Seroka said more ocean carriers are already moving more containers through Los Angeles due to the drought in the Panama Canal and he expected more in the coming months: “Yes, I do. And when I was in Korea and Singapore a couple of weeks ago talking with not only shipping lines … and manufacturers, they're taking even more of their traditional allocation that would normally go through the canals and shifting it to Los Angeles.”
Higher fuel prices are also driving the cargo shift: “Also, with the price of that vessel fuel doubling over the last eight months because of the war in Iran and the … other conflicts in the Middle East, longer transits burn more fuel at higher prices. Those costs are passed on to importing and exporting companies. Shorter, quicker transits to get to market are the order of the day for many … You're also seeing cargo that would normally move through the Suez or Panama Canal coming our way. I talked early on about probably seeing a 5% uptick because of these two issues, and it's probably going to be a little bit more than that.”
Cargo Volume Breakdown
In terms of the cargo breakdown for September, Seroka reported the following:
Imports: “We handled 545,696 loaded import TEUs in September, our best inbound volume tally ever. That's 19% above last September and 26% over our five-year average. We're seeing strong volume from major retailers and other importers as they bring in merchandise for the holiday season and replenish inventories. And here's the number that really stands out. This marks the 10th time the Port of Los Angeles has handled more than a half million loaded imports in a single month. No other port in the United States has yet to do that even once.”
Exports: “On the export side, we handled 125,751 loaded TEUs. That's up 10% compared to last September. But outbound volumes remain softer than normal, which reflects the ongoing challenges facing American farmers and manufacturers.”
Empty containers: “To round it out, we processed 371,206 empty containers, the highest monthly total import history. That's not surprising given the record level of imports. Ocean carriers are working to reposition equipment back to Asia for the next round of shipments headed our way.”
For the first nine months of the year, “we've handled nearly 8.1 million TEUs, about 3% more than we did last year at this time.”
High Diesel Fuel Prices Impact Truckers
Seroka said that high diesel fuel prices that began to rise with the onset of the war with Iran are hurting harbor truckers, especially companies with small fleets: “And I think the prices here in Los Angeles County to the Auto Club AAA are in the neighborhood of $8.30 and change. Diesel prices are up 62% since February 28th. Two thirds of our cargo moves in-and-out of this Port by truck. More than half of the truckers registered to do business here are small business-people having five rigs or less in their company. And this is not necessarily a price hike that can be passed on. If you're a small business competing with larger companies that can absorb some of this shock, that's a tough spot to be in. So, we're trying our level best to help support these folks and getting them clear and clean runs every day so they can make more turns, which means more money for those truck drivers. At the same time, fuel at the pump here is up 36% since the end of February and the commencement of the war with Iran. And that vessel fuel we use for these ocean-going ships has doubled during that time. All these costs get passed on to the American families. That's fact.”
The bottom-line on high fuel prices is that “at a time when the American economy is moving forward, what could this economy's growth have looked like without the tariffs, trade policies and the price hikes in energy? This conversation is not over yet. Affordability for American families is front of mind every day and night.”
Vincent Thomas Bridge Shutdown
The Vincent Thomas Bridge that links Terminal Island to the City of San Pedro will shut in November for repairs causing diversions and delays to cars and trucks: “And when the bridge does close down on Saturday, November 7, people are going to have to take detours and alternative routes to get between here (San Pedro), Terminal Island, Long Beach and back. You know, it's only about 8% of our container traffic that goes over the Vincent Thomas Bridge. But that's 8% of the truckers and business-people that are going to have to find new ways to move that cargo in and out.”
Seroka pointed out that there is room at terminals for additional trucking appointments: “Our Port Optimizer (cargo projector) routing system also has a new component that we put in about a year ago for truck appointments. And what it shows right now is that 40% of our appointments are still open. Now, yes, we want dual transactions, empty returns, and we're going to keep working really close with Robert Loya (CEO Harbor Trucking Association) and the Harbor Trucking Association. But we've got to fill those appointments, get the products to and from market.”
New Taller Bridge?
Seroka was hopeful that the Port will find the money to build a higher bridge to replace the Vicent Thomas utilizing private funding: “We … signed an MOU a couple of months ago with the State of California. And I've been so heartened that our ability to build a new bridge with higher clearance and wider lanes to handle more cargo and the biggest, cleanest ships in the world is right on target. I think we're going to be able to fund this privately and have it supported by the industry.”
Seroka said the federal government was being supportive of the effort: “After my visit with U.S. Secretary of Transportation, Sean Duffy, who came out here to the Port and had a three-hour meeting with us and a Port tour, I think we're going to see the federal government invest in that bridge as well and help us with permitting and entitlements along the way.”
House Opposes Renewal of Port Infrastructure Grants
Meanwhile, back in Washington, the House of Representatives Transportation Committee has approved a five-year surface transportation authorization, the Build America 250 Act. The bill authorizes federal surface transportation (highway, public transportation and rail) programs and activities through fiscal year 2031. However, the House committee version did not include re-authorization for the Port Infrastructure Development Program grants that the US ports had sought. This was a concern raised by the government affairs representatives of the American Association of Port Authorities (AAPA) during AAPA’s convention in New Orleans.
Seroka was asked by AJOT to comment on the importance of those PIDP grants to US. ports: “In a word, super important. The PIDP grants support our nation's ports across the board. And here in Los Angeles over the years, we've put that money to good work on State Road 47 and the interchange project over at Fenix Marine Services (FMS operates the container terminal Pier 300, the second largest container terminal at the Port of Los Angeles) and so many others. I think we're going to continue dialogue with the (House) committee and remind them of how important the PIDP is … The federal partnership, along with state and local investment, is really critical to growing the nation's economy and that which we support right here at home. It also supports American exports… “So I'm hopeful Congress will come around on this issue…”
