BRi USA NEWS - Port of LA Director Fears Permanent Loss of Imports
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Gene Seroka reports worst May in more than a decade, predicts 15% of import cargo won’t return.
The Port of Los Angeles has been battered by its slowest May since the recession of 2009. Year-over-year volume was down 30%, from the 828,662 twenty-foot equivalent units (TEUs) handled in May 2019 to 581,664 TEUs this year.
“Key factors included America’s shutdown economically due to COVID-19’s pandemic. There’s less consumer purchasing, less U.S. manufacturing. We also see the continuing negative impact of the trade war between the United States and China and the policies that have been in place,” said Port of LA Executive Director Gene Seroka. “We’re also comparing the busiest month of May in our 114-year history and that was in May of last year in 2019, so the bar was set pretty high due to a strong advance of inventories during that trade debate,” he noted.
Seroka expects the negative effects from the U.S.-China trade war and the coronavirus pandemic to linger throughout the remainder of the year, and he said both have significantly damaged the supply chain.
Seroka said as an example, “the U.S.-China Phase One trade deal calls for $36.5 billion worth of agricultural exports from the United States to China in year 2020. The United States Department of Agriculture projects that by September, after three-quarters of this year, that total will only be $8 billion, so we’re lagging behind in the commitments of this Phase One China trade deal by the principals. Seroka said in his estimation, “we will have a permanent loss of 15% of our imports that won’t return due to the trade policies.”
But if there is a silver lining with the loss of imports, he said, “we may just have a chance to have a better balance of trade with imports and exports, which in effect could lower our cost to serve, making us a more desirable trade gateway.”
Volumes down across the board, cancelled sailings easing
Seroka said all lines of business at the Port of LA in May were in “negative territory,” with the exception of the automotive sector.
Cancelled sailings, “the largest we’ve seen in the industry in some time,” also delivered a blow to the port, Seroka said. “Quarter 1 showed 40 cancelled sailings coming to the Port of Los Angeles and by the end of Quarter 2 we’re estimating 23 ship sailings will have been cancelled coming to the Port of LA. For the month of May specifically, we received and worked 60 vessels, compared to 89 ships last May,” he said.
Seroka did say it appeared container ships from Asia are beginning to return to LA. “June cancelled sailings estimates have eased somewhat compared to months recently witnessed and those in May,” he said.
June 19 Stop-Work Order Won’t Hurt US West Coast Cargo Flow
West Coast terminal operators and dockworkers agreed to move next week’s regularly scheduled stop-work meeting to the June 19 day shift, but said cargo-handling at the ports will not be impacted.
The West Coast waterfront contract states that the International Longshore and Warehouse Union (ILWU) each month can hold a stop-work meeting to discuss union matters. The meeting is usually held on the second shift on a Thursday, when terminals are not as busy as during day shifts.
Given the recent events in Minneapolis, the ILWU requested, and the Pacific Maritime Association (PMA) agreed, that the stop-work meeting could be held on the day shift June 19 so West Coast longshore workers can participate in national Juneteenth activities. The ILWU serves the Ports of Long Beach/Los Angeles, Oakland, Seattle, Portland, and Tacoma.
James McKenna, president of the PMA, said terminal operators and shipping lines at West Coast ports have been notified of the change. Most terminal operators will reopen for the night shift that day, he said.
Uneven Air Cargo Demand Congesting Major US Hubs
Intense demand for face masks, personal protective equipment (PPE), and other medical supplies to fight the COVID-19 pandemic and a shortage of ground handling personnel is causing congestion at airports across the United States.
It has been reported that cargo pickup and drop-off wait times at major US hub airports have increased from four to five hours prior to the pandemic to between six and seven hours on average, with anecdotal reports of wait times of up to one week.
With the vast majority of passenger flights grounded since March, cargo carriers have been transporting essential cargoes on freighters and converted passenger craft, which take longer to unload than just the belly holds of passenger planes. At the same time, ground handlers have laid off or furloughed staff due to a drop in revenue during the COVID-19 crisis, further exacerbating the issue.
A combination of factors are causing the new delays, as ground handling agents are used to handling belly freight on passenger planes. However, freighters and passenger plane conversions take longer to load and unload.
Ground Handler Shortage Contributing to Problem
JFK International Airport in New York City is experiencing greater cargo congestion and ground delays today, said Brandon Fried, executive director of the Air forwarders Association. “There are many causes but the most frequent reason we hear is lack of staffing among ground handlers,” Fried told JOC.com. “New York has been very hard hit by coronavirus and, as a result, many workers are not showing up to unload the flights. For the time being, we’re going to be doing some suffering.” It should be noted that there are also difficulties in staffing up quickly when air freight volumes fluctuate for airlines and ground handlers.
Typhoon Could Hit Port of Hong Kong This Weekend
A cluster of thunderstorms over the Philippines has the potential to become a typhoon during the next couple of days. This storm, which would be named Typhoon Nuri, could track over south Eastern China over the weekend. The projected track takes the storm close to Hong Kong on Sunday, June 14.
The potential typhoon could delay various services, from container cargo to cruises and public transportation.
USTR Announces Amendments, Grants Exclusions and Considering Others
The United States Trade Representative (USTR) has made several announcements for Section 301 goods including List 1 technical amendments, granting additional List 4 exclusions and is considering extensions to previously granted exclusions for List 1 and List 3. Please see the following:
- A technical amendment has been made for HTS code 8479.82.0080. The Federal Register Notice for the change is here.
- Additional exclusions have been announced for items on List 4 for additional tariffs from China. Among the products are various gloves, plastic fittings, steel wire, LCD displays, etc.
The USTR is also considering extending exclusions on certain goods in List 3. The exclusions were previously granted under the following notices are set to expire August 7, 2020: 85 FR 23122, 85 FR 27489 & 85 FR 32094. The public docket portal is open for comment June 8, 2020 to July 7, 2020.
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