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Is this the calm before California ports’ next cargo storm?

Improved velocity and fluidity, yet higher risk after China COVID outbreak

(Photo: Port of Los Angeles)

Finally, some relief from supply chain bottlenecks for the besieged ports of Los Angeles and Long Beach. In the first two months of 2022, the queue of ships waiting for Southern California berths fell. Velocity of cargo moving through terminals increased. And more boxes were unloaded at Southern California docks.

Relief may be brief, however.

Gene Seroka, executive director of the Port of Los Angeles, acknowledged during a press conference on Wednesday that another round of cargo surges could lie ahead. This week’s COVID lockdowns in Shenzhen, China, could lead to a “hockey stick” of inbound cargo volumes after factories reopen.

Meanwhile, inbound volumes “will likely pick up given the direction retailers are giving us on their need to replenish inventories.”

Then comes the risk from port labor negotiations this summer. Plus the annual peak-season volume increase, which last year began in June.

Seroka didn’t sound worried. “You can’t jump at shadows. You can’t run around like your hair’s on fire,” he said. Rather, the port must use data to “see around the corners and over the hills better than in the past.” It must “be as resilient as possible” to “handle the surges.”

Improving metrics

The Port of Los Angeles reported its best February ever on Wednesday, with total throughput (including imports, exports and empties) of 857,764 twenty foot equivalent units, up 7.3% year on year, and imports of 424,072 TEUs, up 2.7%.

Last week, Long Beach likewise reported its best February ever: 796,560 TEUs in total (+3.2%) and imports of 390,335 TEUs (+4.4%).

In November and December, imports to both Los Angeles and Long Beach fell, not just compared to earlier in 2021, but compared to pre-COVID levels for that time of year. It wasn’t due to a lack of imports. There was an entire month’s worth of cargo volume stuck on ships waiting offshore. It was due to landside bottlenecks that prevented more cargo from being brought ashore.

That negative trend has at least temporarily reversed. Combined Los Angeles/Long Beach imports during January-February sequentially rose 8% compared to November-December. This implies an easing of landside bottlenecks allowing more boxes to be be unloaded from ships.

Chart: American Shipper based on data from ports of Los Angeles and Long Beach

Another positive sign: The queue of waiting container ships rose from 73 to 101 over the last two months of 2021. So far in 2022, it has fallen from 101 on Jan. 1 to 42 on Tuesday.

“Fluidity and velocity on our docks continues to improve,” said Seroka. Average container dwell time in Los Angeles is at five days, down from a high of 11 last fall. On-dock rail dwell time is at four days, down from 13.5 days last summer.

Seroka also cited fewer cuts in port labor gangs. There were 550 gang cuts in December, 600 in January and just 200 in February. The reduction, he said, shows that the omicron wave affecting port labor has abated and “terminals have more space to maneuver and are not being forced to turn away work shifts.”

In addition, velocity of cargo leaving Los Angeles terminals has increased, rising from 170,000 containers in November to 200,000 in the past 30 days.  

What comes next

However, the sharp drop in the offshore ship queue does not appear to be primarily driven by greater cargo velocity on land.

According to consultancy Sea-Intelligence, which analyzed trans-Pacific liner schedules, it is largely due to fewer ships leaving from Asia around the Lunar New Year holiday, a deployment trend that is now reversing.

Chart: American Shipper based on data from Marine Exchange of Southern California

“We expect an increase in vessels headed our way,” Seroka confirmed.

Asked about the COVID outbreak in China, he said that about a third of Los Angeles’ imports come from areas affected by lockdowns. “This is a developing story. We are watching it very closely.”

What happens next “depends on how severe this particular wave is and what the central government is going to do. If factories shut down, the impact on cargo movements is not going to be felt for weeks to come. If the factories come back and they try to catch up on purchase orders, there will be another surge.”

COVID fallout?

When COVID closed the port of Yantian last June, it created a lull in trans-Pacific cargo flows to Southern California, allowing terminals to clear some of their backlog — after which the delayed cargo arrived, causing even more congestion than before the lull.

It could happen again. “If we have a lull due to shutdowns at ports, terminals, factories and other businesses that convey cargo, it is going to give us a chance to catch up even more,” said Seroka.

The number of ships heading towards Los Angeles/Long Beach across the Pacific is down to the mid-40s from an all-time high of 109 on Jan. 9, but it’s still about 50% above the pre-COVID norm of 30 container ships en route.

“We’ve got some more work to do to get that down and be ready for the hockey stick,” Seroka said, referring to the possibility of a wave of cargo arriving after Chinese factories restart.

Scheduling delays from China to LA remain high. Blue line = days late vs. scheduled arrival from Shanghai. Green line = from Shenzhen. Chart: FreightWaves SONAR (To learn more about FreightWaves SONAR, click here.)

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Greg Miller

Greg Miller covers maritime for FreightWaves and American Shipper. After graduating Cornell University, he fled upstate New York's harsh winters for the island of St. Thomas, where he rose to editor-in-chief of the Virgin Islands Business Journal. In the aftermath of Hurricane Marilyn, he moved to New York City, where he served as senior editor of Cruise Industry News. He then spent 15 years at the shipping magazine Fairplay in various senior roles, including managing editor. He currently resides in Manhattan with his wife and two Shih Tzus.