News / Cargo shifts back to US west coast ports, but some has gone for good

Photo: POLA

Beneficial cargo owners have begun to move traffic back to US west coast ports from the east.

The western gateways lost volumes to ports on the east and Gulf coasts after concerns of potential lockdowns or congestion.

The return is driven partly by rising confidence that serious disruptions will not occur, and partly as a result of cost pressure.

The twin gateways of Long Beach and Los Angeles have seen steep drops in container volumes. Throughput at LA was down 22% year on year in April, with volumes in the first four months 29% lower than in the same period in 2022.

According to Descartes Datamyne, west coast ports processed 40% of US container imports in the first quarter this year, down from 45% in the same period in 2019.

But now, said Bob Imbriani, SVP international of forwarder Team Worldwide: “We’re seeing more freight going back to the west coast.”

And Steen Christensen, COO international of Seko Logistics, said that there had been a shift now carriers had deployed enough capacity. Shipper Colgate-Palmolive had diverted 25% of its containerised imports but has begun to bring some of this back.

Ports have noticed the uptick. Last month, Gene Seroka, executive director of the port of Los Angeles, said box volume rose 28% from February to March and another 10% from March to April – and he expected the trend to continue last month.

The nearby port of Oakland clocked up 174,482 teu in April, up from 170,268 the previous month, and the second consecutive month of growth, said maritime director Bryan Brandes.

“Given the increase we’ve seen in business, we are optimistic about a stronger second half through Oakland,” he added. “We also anticipate increasing the number of ocean carrier services offered at the port in the coming months.”

Much of the shift away from the west has been attributed to worries about a work stoppage at the ports during contract negotiations between port labour and the lines and terminal operators. These talks have dragged on way beyond the expiry of the contract last summer. Both sides have been tight-lipped about the talks, but reported progress in April. And last month the White House’s supply chain envoy expressed confidence that a tentative agreement should be reached soon.

Observers also take heart from government hopes bring the negotiations to a fruitful outcome without stoppages along the way. The administration was quick to prevent a strike during negotiations between the railways and rail labour unions in December.

Cost is another strong factor to prompt cargo owners to return to the west coast. Mr Imbriani noted: “Rates to the west coast are down dramatically.”

According to Freightos, last week, rates from Asia to the west coast were at $1,540 per feu, while prices from Asia to the west coast stood at $2,321 per feu.

Greg Weigel, chief business officer of AIT Worldwide Logistics, said some diverted volumes were still moving to the east coast, but added: “We expect, with west coast rates still dropping, the shift back west will accelerate.”

There is further pressure on rates for cargo out of Asia moving through the Panama Canal. Several container lines announced surcharges and weight limits for 1 June, in response to draught restrictions as a result of low water levels. This is likely to worsen in the weeks ahead, as water levels are expected to sink further until July.

It is hard to get a handle on how much traffic cargo owners are bringing back to the west coast, but there is broad agreement that some has gone for good. For nursery furniture retailer Million Dollar Baby, about 10% will probably not return, as it has established distribution centres near ports in New Jersey and Georgia.

This was a strategic move to position inventory closer to the consumer set in motion before the pandemic. Other importers are probably harbouring similar ideas.