East Coast may overtake San Pedro Bay ports in cargo volume this year


For years, the twin ports of Los Angeles and Long Beach have ranked as the two busiest container ports in the United States, respectively. Following a record year in 2021, however, the San Pedro Bay ports continue to lose market share to East and Gulf Coast ports, putting their top rankings on the line—at least for this year.

In August and September, the Port of New York and New Jersey—regularly ranked as the third busiest container port in the U.S.—handled more shipping containers than both the San Pedro Bay ports, a rare occurrence that has only happened two other times since the start of 2019—and that was in February and March 2020 when trade dropped sharply on the West Coast amid closures at Chinese ports due to the outbreak of the coronavirus.

“For a number of years, we have witnessed an incremental loss of market share,” Port of Long Beach Executive Director Mario Cordero told the Business Journal. “The big picture from the nation’s perspective, it’s not a bad thing. [Other ports] have been engaged in their own capital improvement investments, so they offer great options for the American shipper.”

While the East Coast port moved 842,219 20-foot equivalent units (the standard measure for a shipping container) in September, Long Beach and LA moved 741,823 and 709,873, respectively. The figures indicate that LA has experienced a more drastic decline in cargo, since the port regularly outperforms Long Beach.

Despite the loss in volume, as of September, the Port of LA had moved over 7.86 million TEUs compared to nearly 7.37 million and over 7.34 million in New York-New Jersey and Long Beach, respectively.

While October data for the Port of LA, as well as for the Port of New York and New Jersey, isn’t yet available, Port of LA Executive Director Gene Seroka said during a recent Harbor Commission meeting that he expected to see a “significant drop” in October.

Indeed, Port of Long Beach data for last month showed a 16.6% drop compared to the same month last year. Imports decreased 23.7% to 293,924 TEUs, while exports decreased 2% to 119,763 TEUs. The number of empty containers moving through the port fell 13.4% to 244,743 TEUs.

While other ports make improvements to remain competitive, Cordero attributed a large portion of the shift away from one of the world’s busiest port complexes to the pandemic-induced congestion and ongoing labor negotiations that cast a shadow of uncertainty over the West Coast ports.

“The American shipper wants to diminish their risks, I can’t blame them for that,” Cordero said.

Often unforeseeable fluctuations in the supply chain amid the pandemic, coupled with an increase in online shopping, caused unprecedented congestion at the ports of Long Beach and LA. At its peak earlier this year, there were over 100 container ships awaiting their turn at the port complex. At the same time, the number of containers sitting idle on docks for extended periods of time waiting for trucks and trains skyrocketed.

The backlog of ships, however, has been mostly in the single digits since mid-September, according to data from the Marine Exchange of Southern California. Similarly, the number of lingering containers fell to just over 3,100 on Nov. 9, port data shows, its lowest level since Nov. 1, 2021, when over 30,000 containers sat for nine days or longer.

The labor contract for International Longshore and Warehouse Union, which represents tens of thousands of dockworkers on the West Coast, expired in July and negotiations are ongoing. Despite no indication that a deal will be made anytime soon between the union and the Pacific Maritime Association, cargo continues to flow through the West Coast with no slowdowns or strikes expected, Cordero said.

Both sides agreed to a full media blackout ahead of negotiations, which means no updates are available on the progress—or lack thereof—being made.

Once labor negotiations are squared away, and with congestion greatly reduced, Cordero said he expects the twin ports to regain some of the lost market share. With that said, he explained that cargo volumes are not the most important metric at the Port of Long Beach.

“Success is not just measured by volume but what we’re doing in other aspects of leading in the sustainable movement of cargo,” Cordero said, touting the port’s quest to reduce emissions to zero in the coming years.

“If we continue to do that, I can guarantee we will remain competitive,” he said, adding that continued infrastructure investment will also increase Long Beach’s competitive edge. “I’m very excited about the next 10 years.”

The Port of Long Beach’s cornerstone project is its forthcoming $1.5 billion Pier B On-Dock Rail Support Facility, which has been working its way through various channels toward groundbreaking for years. The project would greatly increase rail capacity, removing trucks from the road and decreasing emissions.

As it stands, about 28% of containers leave Long Beach via rail, a figure that could reach as high as 38% over the next decade.

While rail will play a major role in the future of the San Pedro Bay ports, labor negotiations between rail owners and unions pose a new threat to the national supply chain. While there has been some headway in negotiations, with numerous unions approving—though sometimes narrowly—new contracts, several hold-outs remain, including the country’s third largest railroad union, the Brotherhood of Maintenance of Way Employees Division, which represents over half the track maintenance workers.

No rail strike is imminent because the union agreed to return to the bargaining table; however, there is a Nov. 19 deadline and negotiations have been deadlocked over the unions’ demands for paid sick time, according to a USA Today report.

As was made evident amid the cargo surges over the past two years, there are not enough truck drivers or chassis to make up for the loss of rail. The result would be another backlog of goods, only this time it would be nationwide, Cordero said.

Cordero acknowledged that the prolonged labor negotiations are part of the growing trend across the country for employees to demand higher wages and better working conditions.

“This dynamic has resulted from the pandemic period we have been in,” Cordero said. “Railroad workers, dockworkers, health workers—this is a phase that we’re going through.”

“The exciting news for us is we’re getting back to the normalization of operations,” Cordero continued, noting that the economy is strong in terms of the labor market, unemployment and personal spending. He noted that the National Retail Federation expects holiday shopping to increase 6-8% year-over-year.

“Those are positive numbers that give us confidence,” Cordero continued. “We’re still in a very good position.”

Source: Long Beach Business Journal