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Viewpoint: LA empty containers tell a compelling story

Port of LA chief says improvement must be made ‘immediately’

(Photo by Jim Allen/FreightWaves)

This commentary was written by Lori Ann LaRocco. The views expressed here are solely those of the author and do not necessarily represent the views of FreightWaves or its affiliates.

New analysis into the empty container exports out of the Port of Los Angeles shows just how desperately the flow of trade is trying to right itself.

According to customs data, the share of empty exports to total exports leaving the Port of Los Angeles is up over 10% and leaving at a faster rate compared to pre-pandemic levels. The rate of empty containers leaving the Port of Long Beach and Port of New York/New Jersey is slightly higher. Exports originating from these ports are currently under review by the Federal Maritime Commission after a noted imbalance of 2020 U.S. exports versus empty containers.

Charts based on data from Port of LA, Port of Long Beach, Port of NY/NJ.

“The majority of these empty containers being exported are currently staged at the terminals,” explained Gene Seroka, executive director of the Port of Los Angeles. “The terminals are moving out these containers with each sailing to free up space in an effort to increase land capacity and bring on more imports. Two-thirds of empty containers are returned to the port’s marine terminals by truck.

Equally important — 30% of all truck appointments are still not being filled each day. We must improve on this figure immediately.”

When comparing the share of empty exports to total twenty-foot equivalent units leaving the Port of Los Angeles, it is slightly higher than pre-pandemic levels. The ports of Long Beach and New York/New Jersey have seen approximately one-third of TEUs returning as empties.

Charts based on data from Port of LA, Port of Long Beach, Port of NY/NJ.

But the clearing of the empty boxes can’t go fast enough. A look at RBC Capital Markets’ Port Heat Map, using data from Orbital Insight, shows the Ports of Los Angeles and Long Beach are dead last in the world in year-over-year performance.

“We found that container ship pricing leads dwell time,” said Michael Tran, managing director of digital diligence intelligence strategy at RBC Capital Markets. “As ship utilization increases, dwell time or discharge time at the port increases. Dwell time leads container ship pricing on the way down, given that the port congestion needs to dissipate before freight costs can taper.”

The number of vessels waiting at anchor off the coast of California is a glaring reminder of this.

“Peak season never stopped,” said Brian Bourke, chief growth officer of Seko Logistics. “This is a super peak or what we are now calling, quantum logistics. Regular supply laws no longer apply.”

SONAR’s incoming China exports last week into the Port of Los Angeles will not help in the clearing of the proverbial decks.

Tran tells American Shipper any estimate on a timeline for a return to normal is futile.

“Bottom-line utilization per ship is driving freight costs,” he said.

Paula  Bellamy, managing director of OL-UK, recently explained to clients that the container issue is really a lack of container-yard capacity both on and off the terminal. 

“How many containers can be stored at each terminal?” Bellamy said. “Keep in mind, once a vessel is discharged, the empties need to be returned and loaded on the next vessel. There are massive amounts of empty containers competing for space with import loads. The wait really depends upon the terminal and of course, who you ask. 

“Is there a port labor shortage? Not really. It is simply a space shortage.”

Lori Ann LaRocco

Lori Ann LaRocco is senior editor of guests for CNBC business news. She coordinates high profile interviews and special multi-million dollar on-location productions for all shows on the network. Her specialty is in politics, working with titans of industry. LaRocco is the author of: “Trade War: Containers Don’t Lie, Navigating the Bluster” (Marine Money Inc., 2019) “Dynasties of the Sea: The Untold Stories of the Postwar Shipping Pioneers” (Marine Money Inc., 2018), “Opportunity Knocking” (Agate Publishing, 2014), “Dynasties of the Sea: The Ships and Entrepreneurs Who Ushered in the Era of Free Trade” (Marine Money, 2012), and “Thriving in the New Economy: Lessons from Today’s Top Business Minds” (Wiley, 2010).