Port of LA Handles Record Volumes, but Imports ‘May Have Just Peaked'

Yahoo

16 hours ago

The Port of Los Angeles reported an all-time record in cargo movement for a single month, eclipsing 1 million 20-foot equivalent units (TEUs) handled for the second time ever.
July container totals came in at 1,019,837 TEUs, an 8.5 percent increase over numbers in the year-ago month.
More from Sourcing Journal
PPI Jumps in July, Underscoring Growing Costs for US Manufacturers-And Likely Future Price Hikes for Consumers
Air Cargo Capacity 'Correction' in Play as Tariff Deadlines Come and Go
Here's Why Consumers Keep Spending Despite Tariffs
Imports came in at the same growth rate of 8.5 percent to 544,231 TEUs as retailers and brands brought in cargo ahead of multiple tariff deadlines: one on Aug. 1 for most U.S. trade partners and another on Aug. 12 for goods exiting China.
The Aug. 1 'reciprocal' tariffs went into effect Aug. 7, while the Chinese deadline to negotiate a new trade deal got pushed back 90 days to Nov. 10.
The previous record for the Port of Los Angeles came in May 2021, when 1,012,048 TEUs were processed—a whopping 74 percent jump from the year prior. The 2021 calendar year also hosts the all-time annual record for total TEUs handled at 10,677,610 TEUs.
Figures for the Los Angeles port came in days after the Port of Long Beach saw its most active July on record with 944,232 TEUs, a 7 percent jump from the year prior. Imported containers had a similar uptick at 7.6 percent growth to 468,081 TEUs.
The records at both ports fulfilled some predictions made in June that had expected a flurry of cargo to reach the gateways as companies rushed to get product into the U.S. at lower prices.
According to Port of Los Angeles executive director Gene Seroka, the twin port had 107 vessel calls in July, 30 percent more than average over the past five years. Sixteen of those ships had a capacity of over 13,000 TEUs, setting another record.
Additionally, the port had 11 unscheduled ship arrivals, which was the most since the pandemic, he said.
But despite the deluge of containers, there was no chaos at either port, unlike during the pandemic era.
'All of this was done without any vessel backups or on-dock congestion,' said Gene Seroka in a media briefing.
The coming months are anticipated to cool down following the strong July, with August TEU counts likely to be between 850,000 to 900,000. Compared to last year's 960,597 TEUs, the Port of Los Angeles would see a 6.3 percent to 11.5 percent decrease in total container volumes.
'It seems likely that goods coming into the U.S. may have just peaked,' Seroka said. 'A lot of inventory is already here.'
High inventory levels signal tariff inflation on consumers
Dr. Zachary Rogers, assistant professor of supply chain management at Colorado State University, said in the briefing that the presence of more inventory in the U.S., alongside the tariffs on lower-margin goods like apparel and toys, has made inventory more expensive for buyers.
Inventory costs sit at 71.9 on the Logistics Managers' Index, the long-term survey which Rogers co-authors. Numbers above 50 indicate expansion, with the higher number representing a faster rate of expansion.
'It's really put stress on the warehousing network. There's a lot of cost right now that is associated with holding on to goods, and that's especially true if we look upstream,' Rogers said.
He noted that while inventory levels were indexed at 47.6 across downstream retailers that have been reducing inventories recently, upstream partners like wholesalers had their inventory levels at 58.5.
'The reason a lot of consumers haven't seen the really big impact of any inflation is because the costs haven't necessarily moved downstream. They're sort of sitting right now in that middle mile,' said Rogers. 'I would expect that we will see inventories move down in September. Generally, retailers' inventories peak in the middle of October, so I do expect we will eventually see those inventories move down.'
Rogers said the peak season is occurring in a 'bifurcated' way, noting the activity happening upstream at ports like the Port of Los Angeles. But since consumer demand has not outpaced supply, pricing effects haven't hit in retail stores yet.
'We probably don't need a lot more inventory ahead of the holiday season because we have so much already,' Rogers said. 'That spike's mostly been in the top and middle of the supply chain. We haven't seen the big price increases yet, but early indicators look like we are going to start seeing those more at the consumer level.'
With the holiday season in closer view, Rogers said he doesn't expect the usual traditional peak shipping season spikes that usually come around from August through October, and expects the ports to have a quieter period.