i3 | May 28, 2020

The Busiest Port in North America

Keeping manufacturing and the supply chain, operational is critical to the U.S. economy. As the world now struggles with the COVID-19 outbreak that first emerged in Wuhan, China in 2019, we heard from one essential player in supply chain operations.

The Port of Los Angeles, North America’s leading seaport by container volume and cargo value alone facilitated $276 billion in trade during 2019. Owned by the State of California, for the past 20 years, the Port of Los Angeles has been the busiest container port in the Western Hemisphere. With record volumes for containerized trade, economic activity generated by the Port is a bellwether for the health of the U.S. economy.

The Port of Los Angeles and neighboring Port of Long Beach comprise the San Pedro Bay port complex, which handles more containers per ship call than any other port complex in the world and has the most activity in the Western Hemisphere. Worldwide, the Port of Los Angeles ranks number 17, and the San Pedro Bay port complex ranks number 9.

Since the COVID-19 outbreak began, trans-Pacific maritime trade has been significantly impacted. In February, cargo shipments dropped 22.9% compared to the year before, and in an April webinar hosted by the Port of Los Angeles, Gene Seroka, executive director of the Port of Los Angeles told participants, “While operations are smooth, cargo volumes have declined precipitously. In the month of March alone, cargo volume was down 31%. And for Q1, we are down 18.5% year-over-year.”

He added that cargo volumes are oughly 80% of normal traffic at this time of year but that while China production is slowly picking up, U.S. purchasing activity has slowed. “Many retailers are postponing, cancelling or otherwise pushing back on orders until we see some certainty in the U.S. economy,” Seroka said.

With so much uncertainty in the supply chain, port operations have had to make careful assessments to meet new challenges. To minimize the risks of COVID-19 and with continuity of operations plans in place, the Port of Los Angeles is coordinating with federal, state and local partners, including the Centers for Disease Control and Prevention (CDC), U.S. Coast Guard, U.S. Customs and Border Protection, Los Angeles County Department of Public Health and other emergency and public health agencies to keep cargo flowing.

Many retailers are postponing, cancelling or otherwise pushing back on orders until we see some certainty in the U.S. economy.

Gene Seroka Executive Director, Port of Los Angeles

Of critical necessity, processing shipments that address COVID-19 for hospitals, first responders and critical infrastructure is a top priority. And part of that exercise is to ensure that port logistics are flowing as smoothly as possible.

China’s COVID-19 crisis impacted cargo movement first, and now with the slow-down in the U.S. economy cargo movement is again being impacted. “We had 41 blank sailings from mid-February to April 1, and that represented about 25% of normal ship calls in LA. That had waned, but now we are seeing the next wave of blank sailings,” Seroka said.

“We have put drones up in the air to look at all of the terminals on our property, the rail connectors, as well as our truck gate activity. Currently, our cargo is moving fluidly. We are moving about half the amount of cargo that we did at the height of the U.S. — China trade war in Q3 of 2019. We have the ability to take on more cargo, but we are seeing a relatively soft market. The effects of both the trade war and COVID-19 will last more than likely through the end of this year — the unevenness of imports and exports, the specificity of demand and what our consumer market will do which makes up 70% of GDP.”

He added, “We do have a down line look at vessels that have been loaded and are moving through the system from Asia and we also have a strong look from all of the steamship lines.” Seroka added, “There may be slight uptick in volume from China at the end of April as China’s manufacturing community slowly comes back online, but we don’t see volume spiking anytime soon. Larger ships are starting to come to the port, and we will see an evacuation of empties and distressed exports making their way back to Asia in preparation for China’s return, albeit slowly, in the manufacturing space.”

Ports are attempting to address empty containers and get exports moving. One issue they have faced is storage space, and a large part of that problem stems from the trade war with China. In an effort to beat paying higher tariffs, companies across the nation shipped cargo in advance of tariff hikes. As a result, storage vacancy at the Port of LA fell as to low as 1%. Port officials have been busy working down that inventory and trying to get boxes and chassis moving to better prepare for COVID-19 response. A buildup of cargo could impede the expeditated movement of key medical supplies.

It is with those key medical supplies in mind that Mayor Eric Garcetti recently named Seroka the city’s chief logistics officer, concurrent with his position as director, to ensure medical supplies are moved quickly to where they are needed. Seroka emphasized the critical need for N95 masks, face guards, and ventilators among other medical items, and put out a plea to companies and organizations for help.

The newly launched Victory LA (LOVLA) will work with outside organizations to manufacture, procure and expedite goods to first responders and hospitals. If your company has products or services to donate, Seroka urges you to connect with them.

For information, reach out to LOVLA@portla.org.

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