August volumes decline at Port of Los Angeles and Port of Long Beach

August volumes at the Port of Los Angeles (POLA) and the Port of Long Beach (POLB) were both down, according data recently released by the ports.

POLA said it handled 826,638 TEU (Twenty-Foot Equivalent Units) in August, which represented a 2.5% annual decline. Despite the annual fall off, port officials said this marks its second-highest volume ever for the month of August and its sixth best month on record.

Imports, at 420,573 TEU, were off 2.8% annually, with exports up 2% to 162,466 TEU. Empty containers dropped 4.9% to 243,600 TEU. Through the first eight months of 2018, total POLA volume is down 2.6% annually to 6 million TEU.

“In addition to being one of our top 10 busiest months, August marked the inauguration of APL’s Eagle Express here in Los Angeles,” said Port of Los Angeles Executive Director Gene Seroka in a statement. “This weekly China to LA service provides an unmatched level of speed to market and is yet another example of our focus on customer service and response to market demand.”

A POLA spokesman recently told LM that on one hand, the economy has been robust and imports have been strong, not only in San Pedro Bay but around the country.

“[But] on the other hand, we have got these tariffs that are in different stages…either looming or some already imposed or retaliatory ones being considered,” he said. “That provides a level of uncertainty. The global supply chain thrives on certainty. We are cautious about the second half. It really depends on how these tariffs take hold. Gene Seroka has said that in looking at the numbers to date we are estimating at least 15% of port cargo volumes would be exposed to the tariffs that are either in place or are part of the $200 billion that are being discussed in the weeks ahead along with the retaliatory measures. When we say ‘exposed,’ that does not mean they would go away…it means those products going through our docks would be tariffed both for inbound and outbound containers. How that affects cargo, whether retailers or consumers back off and slow orders, or if tariffs are passed along, remains to be seen and is a concern.”

He added that POLA has been stressing that half of U.S. imports go to U.S. manufacturers to be processed, so it does not represent all finished products. And he added that POLA would like to see negotiations at the highest levels to commence immediately with all nations impacted by tariff actions involved.

“We believe negotiation is the best pathway to resolving these issues, and we want a fair and level playing field for U.S. businesses competing in the global economy and want to see negotiations commence to resolve these issues,” he said. “The longer it goes on, the more uncertainty it creates in the marketplace.”     

POLB reported that total August volumes, at 679,543 TEU, were off 1.9% compared to August 2017. Imports dropped 3.6% to 343,029 TEU, and exports headed up 1.9% to 119,546 TEU. Empty containers saw a 1.1% annual decline to 216,968 TEU. And port officials noted that when looking at these volumes that they are being compared to August 2017, which is one of the highest-volume months in the port’s history and was its third highest month ever at the time and has been topped three times in the since then.

Total volume through August 2018 is up 9.4% annually at 5,320,930 TEU.

“Our Port’s decline in cargo over the last two months is in large part due to a realignment of ocean carrier alliance services and port calls,” said Port of Long Beach Executive Director Mario Cordero in a statement. “Another factor is higher tariffs by the United States and China. Thus far, that appears to have helped increase traffic, as shippers act to beat duties imposed on goods this summer.” 

Todd Fowler, KeyBanc Capital Markets analyst, wrote in a research note that POLA and POLB Container imports were below seasonal variations and down year-over-year during August, largely attributable to prior-year comparisons and potential pull-forward ahead of anticipated trade discord.

“August 2017 exhibited notable strength (+7.5%) as restocking activity continued in earnest after a slow start to the year,” he wrote.  “Looking ahead, we expect volumes to remain stable considering lean inventories and stable consumer end markets, but to moderate in line with seasonal variations and likely remain below prior year levels considering more challenging prior year comparisons.”