LB ports eye record throughput, but there are 'signals of strain'

19/12/2024

The main US port complex of Los Angeles and Long Beach is on target for record volumes this year.

Both gateways saw big spikes in throughput last month and predict more frothy volumes for December.

So far, they are coping with the elevated traffic levels, but signals of strain raise questions about a possible spike in January, as spillover from a likely east coast port shutdown threatens to hit in the run-up to the Chinese New Year holiday.

With 884,315 teu processed in November, a 16% increase year on year, the port of LA reaffirmed its position as the top US gateway for imports. This brought its tally for the first 11 months of the year to 9,375,735 teu, up 19% on a year earlier.

“We are well on pace to exceed 10m container units for only the second time in our 117-year history,” said Gene Seroka, the port’s executive director.

Neighbouring Long Beach clocked up a record 884,154 teu in November, an increase of 20.9% year on year, that set it on course to reach 9.6m teu for the full year. Imports have grown 21.8% in December, while exports expanded 9.5%.

Celebrations of the increase in traffic are, however, tinged with a hint of concern on how the system will cope with continuing record volumes. The spectre of import tariffs by the incoming federal government has triggered a rush among importers to bring in inventory ahead of implementation.

Coming on top of increased volumes as importers try to bring in goods before a second strike at the US east and Gulf coast ports in January, the surge could overwhelm capacity.

The US Port/Rail Ramp Index for December, published monthly by ITS Logistics, points to signs of strain at the ports in southern California and Washington state, as well as at rail heads in the western US, and warns of potential problems.

“The volumes coming from Asia on the transpacific trade routes are not overwhelming the supply of capacity, as spot rates at origin are not being pushed higher,” observed Paul Brashier, VP global supply chain for ITS Logistics.  “For the time being, everything seems balanced. 

“That said, if the US west coast continues to be a release valve for a potential ILA strike supply chain disruption, there is a high risk that both west coast port and rail operations could become overwhelmed.”

And signs of strain are already visible on the land side, according to ITS.

“Rail operations in Seattle and Los Angeles continue to struggle with IPI freight and higher volumes of domestic peak retail freight,” the authors noted, adding that rail dwell time at the port of LA crept up to nearly eight days by mid-November.

Mr Brashier observed that “available [rail] equipment for west-east goods flow is, and will continue to be, problematic. Most anticipate that to worsen as we get into January,” he said.

The stress is extending to the trucking sector. ITS warned: “Due to many shippers avoiding IPI legs and rail service for domestic goods, we are starting to see considerable capacity strain and upward rate pressure for lanes moving west-east on over the road capacity.”

Mr Brashier added that a “significant amount of transloading” had been going on that affected available capacity for trucking cargo east, driving up rates as well as restricting capacity for shipments originating in the west.

While most other metrics at the ports show “elevated” strain, the ITS index rates the outbound capacity problems at North American Pacific ports, including Vancouver and Prince Rupert, as “severe”.

This is already having an impact on pricing.

“Accessorial charges are reportedly increasing for many shippers,” the ITS index warned, and advised cargo owners to review their invoices, “as those charges are the first sign of operational stress”.

For now, Mr Cordero is upbeat on Long Beach’s ability to cope with the elevated volumes. He said: “We will continue to handle this influx of cargo smoothly and with zero disruptions through the end of 2024.” he said.

But Mr Brashier warned: “Shippers are adding 3PL space for additional inventory, elevating inbound container volumes through the LA/LB gateways, and ocean carrier spot rates on the transpacific trade lanes from Asia to the US are increasing.”