5 days ago
LA, Long Beach Ports Brace for Potential Record-Breaking Summer Surge
The Los Angeles and Long Beach ports could be in for a busy summer as shippers again rush to get goods into the U.S. before two tariff deadlines in July and August.
According to a report from maritime trade advisory service Sea-Intelligence, container shipping lines are planning to offer approximately 18 percent more year-over-year capacity on the Asia-to-North American West Coast trade lane in June and July.
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If the San Pedro Bay ports were to handle that much inbound cargo during the period, records could be set, the firm says.
'The Port of Los Angeles will be faced with volumes in June which are almost at the level seen at the maximum in 2024, but in July 2025 they will face volumes significantly exceeding the pandemic-induced spike in 2021,' said Alan Murphy, CEO of Sea-Intelligence, in a weekly update. 'The Port of Long Beach would see new volume handling records for both June and July.'
The potential records are a reversal from both ports' expectations for May, when U.S.-bound traffic collapsed amid President Donald Trump's tariffs, which most heavily impacted goods coming from China.
While neither California port has posted official numbers for the month, Port of Los Angeles executive director Gene Seroka confirmed that it saw a more than 30 percent decline in inbound cargo volume in the first week of May.
Seroka said the remainder of the month was 'likely to be substantial,' while his counterpart at the Long Beach port, Mario Cordero, projected a 'more than 10 percent' import drop-off for the month.
But with last month's truce seeing both the U.S. and China scale back their tariffs for 90 days, American importers have since raced to gobble up space on vessels on the Pacific Ocean ahead of the Aug. 14 deadline.
For the Port of Los Angeles, the July import total could potentially result in 585,178 20-foot equivalent units (TEUs), which would mark a 9.2 percent increase over the record monthly total of 535,714 TEUs set in May 2021.
The Port of Long Beach would set an all-time import record in June, only to surpass it again in July, according to the Sea-Intelligence projections. The respective 493,481 and 516,578 TEUs in each month would outshine last October's 487,563 containers imported at a pace of 1.2 percent and 6 percent.
Across the two months, 397,000 TEUs are expected to be added on the Asia-to-West Coast lane as a whole. In five of the next 11 weeks, Sea-Intelligence expects capacity growth exceeding 30 percent year over year.
In June, the lines are increasing capacity 12.8 percent compared to before the May 9 tariff pause. That number will jump to 16.5 percent in July.
'It is of course an open question whether the tariff-induced volume surge will match this capacity injection,' Murphy said. 'However, if it does, it can create a significant issue in the ports of Los Angeles/Long Beach.'
Both Seroka and Cordero have insisted that the congestion isn't likely to overwhelm the port systems. The L.A. port director noted in a May press briefing that learnings from the Covid peak helped the port prepare to move 25 percent more empty containers back to Asia in April than the year prior.
As trans-Pacific demand is increasing, ocean freight rates on the route continue to skyrocket. Data from Drewry's World Container Index (WCI) shows spot rates on the Los Angeles-to-Shanghai path escalated 57 percent from the week prior to $5,876 per 40-foot container.
Over the past four weeks, spot rates have jumped 117 percent on the trade lane. On the trans-Pacific route to New York, rates have risen 39 percent in the past week and 96 percent in the past four weeks to $7,164 per 40-foot container.
Freight rate benchmarking platform Xeneta's data reflected a similar reality, with weekly rates up 63 percent on the Far East-to-U.S. West Coast route to an average of $5,082 per container. As of Thursday morning, Far East-to-U.S. East Coast containers shot up 48 percent to $6,160.
The rate acceleration doesn't appear to be sustainable, particularly if supply chain imbalances occur closer to the tariff deadlines and demand for cargo falls off again.
Drewry's Container Forecaster expects the supply-demand balance to weaken again in the second half, which would cause spot rates to decline again in the second half of this year.
Xeneta has similar expectations.
'Right now, it seems carriers are telling shippers to jump, and some are replying 'how high?'' said Peter Sand, chief analyst at Xeneta. 'This will not last because capacity is heading back to the trans-Pacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up. Spot rates are expected to peak in June before downward pressure returns.'
