Busy West Coast Ports Expecting a Traffic Slowdown

·4 min read

Retailers have been talking about how they must cut back inventory, but that hasn’t materialized yet at the two largest ports in the nation.

The Port of Los Angeles had the busiest July ever in its 115-year history. “July was another outstanding month here at the Port of Los Angeles,” said the port’s executive director, Gene Seroka. “It was 5 percent more than last July’s strong showing.”

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In total, the port cleared 935,020 20-foot containers in July compared to 890,799 20-foot containers passing through the port in July 2021.

Even though traffic volumes are up, clearing cargo containers off the docks is much improved. There are fewer cargo container ships on the water waiting to find dock space. In January, there were 109 vessels queuing up for dock space. Currently, there are 13 vessels waiting in line, Seroka said.

Next door at the Port of Long Beach, longshore workers also were working hard as the port had its busiest July on record. Some 785,843 20-foot containers made it across the docks, which was a slight 0.13 percent uptick from one year ago. The port has broken monthly records in six out of the last seven months.

Together, the Port of Long Beach and the Port of Los Angeles move about 40 percent of all the cargo container shipments coming into the United States.

Right now, traffic is moving fairly smoothly at the ports, but officials are still dealing with the uncertainty generated by the contract negotiations going on between the dockworkers and their employers.

The previous contract between the International Longshore Workers Union, which represents 22,000 workers at 29 West Coast ports, and the terminal operators who employ them, expired on July 1. Negotiations, which started May 10, continue in San Francisco.

Some progress has been made. In late July, the Pacific Maritime Association, which represents the terminal operators, and the ILWU issued a statement saying they had reached a tentative agreement for health benefits, subject to agreement on other issues in the negotiations.

That is an important part of the contract. But one of the more contentious issues, however, is automation and how it will be integrated into port activity. That is still on the table.

Because the previous ILWU contract was not temporarily extended beyond July 1, workers have the right to strike or stage a work slowdown to pressure negotiations. That could throw a monkey wrench into the flow of business at the West Coast ports.

Meanwhile, there are other problems to be resolved at the ports. Dwell time for cargo containers to be picked up by rail is averaging 12 days compared to 11 days last year, which is still very long. In the past, it took only three or four days to get a container loaded onto a rail car.

Dwell time for containers waiting to be picked up by truck is better. It is taking about four days for a container to be picked up compared with 11 days last year. “I am especially pleased with the cargo moving by truck,” Seroka said. “We’re down to about 2,000 containers waiting nine plus days for trucks versus more than 32,000 units last October.”

While cargo container traffic has been high since 2000, traffic volumes should decline as soon as big-box retailers such as Walmart Inc., Target Corp. and others reduce their imports because they have too much inventory.

Walmart recently announced it was cutting hundreds of billions of dollars in orders during the fourth quarter because it had too much merchandise.

“Imports will begin to ease somewhat,” said Seroka of the Port of Los Angeles. “I expect to see that reflected in August cargo numbers.”

The Port of Long Beach expects to see a slowdown, too. “Although cargo continued to arrive in record numbers through July, we expect shipments to slow following the traditional peak season,” said Noel Hacegaba, deputy executive director at the Port of Long Beach. “High inventory levels, changes in consumer spending and inflation are converging to slow down the historic import surge that began in the summer of 2020.”

A traffic slowdown might be good news for the Port of Oakland, which was hampered last month by a one-week strike by truckers picking up cargo there. The truckers were protesting Assembly Bill 5, a gig economy law that makes it harder to classify workers as independent contractors instead of employees.

The California Trucking Association has argued the law makes it harder for independent drivers who own their own trucks and operate on their own hours to make a living by forcing them to be classified as employees.

The one-week strike caused container volume at the Port of Oakland to dip 28 percent in July compared to the previous July.

Port officials estimated it will take a month to clear the backlog of cargo containers.

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