News / Port of LA chief dismisses disruption as 'minimal' and anticipates 5% growth

Source Port of Los Angeles

14/06/2023

Disruption at the US port of Los Angeles has not prevented it from predicting significant growth this year – even as President Biden steps in to help end the months-long stand-off between labour and management.

The president sent acting labour secretary Julie Su to talk to the ILWU and the PMA after pressure to help fix the situation. She has close ties to both unions and management in California.

But port executive director Gene Seroka described the results of the current friction between dockworkers and their terminal operator employers as “minimal disruption”.

Despite container throughput last month continuing its double-digit slide from last year, the port’s management expects 5.1% growth in the coming fiscal year, which starts on 1 July.

In May, the port processed 779,140 teu, 19% less than that handled in May 2022. Loaded imports slipped 18%, to 409,150 teu, while loaded exports fell 19%, to 101,741 teu. May’s throughput brought the port’s tally for the first five months to 3,304,344 teu, down 27%, year on year.

But management stressed that volume in May was 60% higher than in February and up 13.2% from April’s 688,110 teu.

In recent months, cargo owners have begun to shift some imports they had diverted to eastern gateways back to the west coast, which offers shorter transits and lower rates from Asia.

“Even with improving volume, our terminals are a long way from working at full capacity,” said Mr Seroka, “but we’re starting to see more vessels headed across the Pacific to Los Angeles, an encouraging sign for the second half.”

However, cargo owners remain concerned about the continuing disruption, which Mr Sekora acknowledged had affected traffic flows at the port – but not, he claimed, in a significant way.

“I think it’s fair to say that while the situation remains fluid, we’ve largely been able to function close to normal,” he said. “Terminals are open, trucks are moving and vessels, by and large, have been on schedule.”

He added that the labour contract negotiations had resumed this week.

Meanwhile, the port is planning for traffic to expand further. For the new fiscal year, it projects 5.1% growth to reach 8.9m teu. Based on this projection, the port’s board of commissioners passed a $2bn budget last Thursday, which anticipates operating revenues to climb 8.6%, to $652.9m, with the bulk (73.3%) coming from shipping services, followed by rentals, at 15.1%.

Operating expenses, which include funding for “supply chain efficiency enhancements”, facility and infrastructure maintenance and environmental, social and governance (ESG) programmes, are expected to reach $372.4m. ESG initiatives include a clean truck fund rate programme to incentivise truckers to use greener vehicles.

“While economic uncertainties still linger, this plan will help guide us for whatever might come our way,” said Mr Seroka. “Bottom line, our strategic, long-term priorities remain the same– modernise physical and digital infrastructure to keep us competitive and invest in community and environmental projects important to our surrounding communities and industry.”