The Port of Los Angeles provided a tempered but positive outlook for volumes at the port for the remainder of 2023 while admitting that they expected the year would be significantly below 2022 levels. While confirming that 2023 so far has been a “challenging year,” they pointed to both a stabilizing and beginning of a recovery saying that the port is optimistic that it will see a better second half of the year.
“The bright spot is an upward trajectory,” said Port of Los Angeles Executive Director Gene Seroka in his monthly update on the port’s performance. Saying that the port expects improving conditions going forward, he noted that March volumes were up 28 percent versus February and that April added another 10 percent increase in volume. April was less than two percent below the port’s forecast for the month with Seroka projecting May would reach or exceed the forecasted level of 700,000 TEU versus the 688,000 TEU total in April.
The port’s volume so far in 2023 is down 25 percent from the record levels of 2022. In addition, at the end of four months, they are 18 percent below the port’s five-year running average. Seroka points to a cooling global economy, lingering concerns in the U.S. over inflation and rising interest rates, warehouses laden with aging inventory, and prolonged West Coast labor negotiations, all contributing to the volume declines. Shippers he repeated since last summer have also been rerouting volumes away from the Pacific Coast due to the uncertainties over the labor negotiations.
“I am optimistic that we will hear good news soon,” Seroka said discussing the ongoing contract talks which are entering their 13th month. “We are on the doorstep of a labor agreement,” he predicted noting that both sides are spending a lot of time at the negotiating table. The Wall Street Journal recently citing people familiar with the negotiations reported that an agreement was close with many key issues resolved and now focusing on wages.
Seroka said however it could take months for volumes to shift back to the West Coast noting that transportation under the contracts is set at least 30 to 45 days in advance. He said the port would be launching a concerted effort to bring volume back and while it was still early in the year, however admitted they expected 2023 to be below 9 million TEU versus 9.9 million in 2022, and exceeding 10 million the prior year.
The Port of Los Angeles’ forecast for stabilizing and slow growth in volumes mirrors the earlier projections by the National Retail Federation. Alan McCorkle, President and CEO of Yusen Terminals (YTI), one of the large marine container terminals at the Port of Los Angeles, echoed the port’s views saying that volumes had stabilized at its terminal. YTI is also expecting some build-back in volumes as the year progresses.
The port is using the current period to strengthen systems to ensure it is prepared for future volume as well as address challenges, including California’s new emissions regulations that target operations at the ports as among the first locations for the new limits. As an example of the steps being taken, McCorkle noted that YTI is set to receive the first five commercially available zero-emissions top handlers later this year. The battery-electric top handlers, essential to container terminal operations, have been in demonstration mode at the port complex. They are also planning a hydrogen demonstration project with Toyota due to start in 2024.