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West Coast Port Slowdown ‘Trend Continues’

The steady march of market softening continues in ocean shipping with the San Pedro Bay ports’ releasing their November cargo numbers.

The indicators point to big work ahead for the West Coast’s largest ports as they hope to claw their way back to the top. 

“The recent trend continues,” Port of Los Angeles executive director Gene Seroka said this week during a media briefing on the November cargo results.  

November container volume at the port slipped 21 percent to 639,344 twenty-foot equivalent units (TEUs) in comparison to a year earlier. The decline was attributable to the drop in imports during the month. 

“As I’ve outlined before, an early peak season and a shift to other ports due to West Coast labor talks have had big impacts,” Seroka said. “And now we’re seeing a nationwide slowing of imports. In fact, U.S. imports for November are expected to fall 12 percent year-on-year as retailers ease factory orders. Also, exports to China fell nearly 9 percent last month. That’s the biggest drop since February of 2020 when Covid lockdowns there brought production close to a crawl. Closer to home, we’re seeing cancelled or blank sailings.” 

The Port of Los Angeles counted 13 blank sailings in November and is projecting 11 in the current month. The numbers rival what the industry saw at the start of the pandemic, Seroka said. 

Jeremy Nixon, CEO of Ocean Network Express (ONE), added more specifics on blank sailings for the Singapore-headquartered carrier when it comes to the route between Asia and the West Coast. The CEO spoke during the same media briefing with Seroka. 

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“So, ever since really the autumn holidays, that first week of October, things have been very soft. And, we’ve been adjusting down,” Nixon said.  

That has equated to about 20 percent currently blanked, with about 50 percent expected to be blanked over the Lunar New Year period, according to Nixon. 

“And then we’ll just bring those [services] back as the demand picks up,” Nixon said. “So, we keep everything in alignment and we don’t cause lots of ships moving around underutilized. And, of course, we also have to think about the exports coming out of North America as well, maintaining enough frequency there. So, let’s see. I mean, the market will decide ultimately in terms of demand.” 

Signs ultimately indicate the early part of next year will be more of the same. 

Seroka said for the Port of Los Angeles, “we’ve got work to do moving forward.” 

He’s focused for 2023 on the dockworker labor negotiations, bringing back business that had been diverted away from the West Coast and improved efficiencies in the way of wait times and data once cargo does come back. 

Mario Cordero, executive director at the neighboring Port of Long Beach, raised a similar sentiment with the facility’s release of its November cargo numbers this week, which were off 21 percent year-over-year to 588,742 TEUs. 

“While some import volume has shifted to other gateways, we are confident that a good portion of it will return to the San Pedro Bay,” Cordero said. “As we move toward normalization of the supply chain, it’s time to refocus our efforts on engaging in sustainable and transformative operations that will secure our place as a leader in trans-Pacific trade.” 

From the carrier perspective looking to next year, Nixon said ONE expects a “very soft” February for sailings from Asia as Lunar New Year comes into focus and factories in China and Vietnam are expected to take a longer holiday than usual. 

He also suggested the spot rate market has bottomed out, although much of that remains contingent on the balance of supply and demand. 

“We’ll probably see some pick-up in seasonality around about March, April, May time, but everything we’re talking about is always on a comparison with the year before,” Nixon said. “And, of course, as we know 2/21 was off the charts in terms of volume. So, it doesn’t surprise me that, at the moment, we’re seeing negative growth rates of between 15 and 20 percent compared to last year because we must remember that last year was 15 to 20 percent up on the previous year, which was a normal year. So, it’s not surprising that we’re seeing some cooling off on a comparative basis.”