Date: Monday, November 14, 2022
Source: Sourcing Journal
Declining consumer demand mixed with cargo diversions to competing ports in the Gulf and East coasts took a bite out of the Port of Long Beach’s October cargo volumes.
The West Coast port reported October volumes off 16.6 percent year-over-year to 658,428 twenty-foot equivalent units (TEUs). The drop occurred in both imports and exports, with imports off 23.7 percent to 293,924 TEUs.
The decline marked the third straight month of falling cargo volume at the port and the highest after decreases of 0.9 percent and 0.1 percent in September and August, respectively.
“I think you’re going to see that the Port of Long Beach along with our sister port, the Port of Los Angeles—this gateway San Pedro Bay complex—will continue to be competitive in the coming years,” Port of Long Beach executive director Mario Cordero said in a media update Thursday. “There’s a lot of talk about the diversion of discretionary cargo to the East Coast ports and the Gulf. I want to congratulate my colleagues there; they’re doing a great job. But, on the other hand, I’m very confident that some of that business is going to come back after the labor negotiations conclude.”
Shippers had been diverting cargo away from the West Coast initially in response to the backlog of vessels waiting to be unloaded at the ports. The more recent diversions attempt to hedge against any possible disruption to cargo movement along the West Coast as the groups representing dockworkers and employers continue their negotiations on a new labor contract. The previous one expired in July.
Cordero went on to say the San Pedro Bay port complex, which consists of the ports of Long Beach and Los Angeles, is expected to handle at least 20 million containers in the future.
Year-to-date TEUs through October are still up from 2021 by 1.5 percent to 8 million at the Port of Long Beach, with Cordero saying the port is “on the cusp” of capping 2022 as a record year for cargo volumes.
Changed shipping routes, along with declining consumer demand, have helped normalize supply chains, allowing Los Angeles and Long Beach to catch up on clearing long-dwelling containers from its docks. Sitting cargo has been cut 88 percent from a year ago.
The back-up of ships in January, totaling 109, is now down to the single-digits for the Long Beach-Los Angeles port complex, according to Cordero, though sources suggest some shippers are just now receiving holiday 2020 merchandise as a result of the backlog.
The reductions have led to an optimistic holiday outlook from the port.
“The shelves will be stocked. In fact, part of our diminishment of cargo in the last month is because a lot of that cargo was moved in advance in this summer,” Cordero said. “We had a very early peak season.”
The executive director went on to say he’s upbeat about 2023 and expects to see a continued normalization of cargo movement at the port.
“For 2023 we’re going to continue with a very healthy movement of containerized cargo,” Cordero said, going on to cite the port’s proximity to Asia as a competitive advantage.
He also pointed to a proposed project by BNSF Railway that will see the development of an inland rail facility in the High Desert city of Barstow, Calif.
The 4,500-acre facility is seen as a way of relieving congestion at the ports and expediting the movement of cargo on to other facilities or terminals by rail.
BNSF expects to spend more than $1.5 billion on construction of the facility, which was announced in October.
“I think the big exciting news here that we have… was one of our Class 1 railroads, BNSF, committed to have a gateway, the Barstow International Gateway,” Cordero said. “That’s going to have in excess of 4,000 acres for an intermodal facility which, to me, is going to benefit the San Pedro Bay complex and even put us in a more competitive edge in terms of what we’re going to be able to do.”