2023-04-29 15:21:49
In October 2021, the busy and chaotic scene of 100 cargo ships waiting to be unloaded in the twin ports of Los Angeles and Long Beach has become a forgotten past. At one point in March, the two ports had just 15 ships, 50% below the median in normal times before the pandemic. In the first three months of 2023, the ports of Los Angeles and Long Beach will handle 3.5 million 20-foot containers (1.8 million in Los Angeles and 1.7 million in Long Beach), an annual decrease of 30%.
The financial media Barron reported on Saturday (29th) that for those hoping for a strong recovery from the Covid-19 pandemic, this decline should be worrying. This is a national problem. The US federal government must work with state governments, business leaders Cooperate with port union workers to increase the port’s competitiveness.
Los Angeles’ dual ports handle regarding 40% of U.S. containerized imports and 30% of exports, and the decline in container volumes might trigger a domino effect, hurting industries across the supply chain, including logistics, warehousing, manufacturing, and retail, while maintaining economic growth will require urgent efforts Stimulate trade flows through these ports.
There are three fundamental reasons for the decline in container volumes at these two ports. First, overall import demand in the US has weakened so far this year. U.S. consumers are spending more on services, from dining to travel, and less on consumables as they emerge from the Covid crisis. Dragged down by high inflation, retail sales fell 1% in March. Despite stagnant demand, retailers are facing huge warehouse inventories they ordered during the pandemic to meet surging demand in 2021.
Imports have fallen as U.S. companies struggle to sell excess inventories. The volume of imported cargo at major U.S. container ports fell to a three-year low in February.
Second, geopolitics has driven importers to ship goods through East Coast ports. Additional tariffs related to the U.S.-China trade war that began in 2018, as well as supply chain disruptions caused by the coronavirus lockdown, have led U.S. companies to shift some of their offshore operations out of China. Some companies are using provisions of the U.S.-Mexico-Canada agreement to import more from Mexico, while others import more from other low-cost Asian countries such as Vietnam.
Third, inefficiency and uncertainty prevent many U.S. importers from relying on West Coast ports for imports. The ports of Los Angeles and Long Beach are inefficient, and the World Bank ranks the port of Los Angeles 328th out of 351 container ports in the world and Long Beach 333rd.
Adoption of automation and digital technology will improve port efficiency, but port workers’ unions fear the innovative technology might affect members’ job security. The modernization of West Coast ports is therefore a sensitive topic as negotiations continue to replace contracts that expire in July 2022. Negotiations with the International Federation of Terminals and Warehouses and the Pacific Maritime Association began in May 2022 but have been dragging on. Terminal operations at the Ports of Los Angeles and Long Beach were closed for two shifts in early April.
Making U.S. ports efficient and reliable is critical if the U.S. is to accelerate its economic recovery. Free Times 0429
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