Southern California ports see big drop in imports as longshore labor talks drag on

LOS ANGELES (CN) — A year ago, the ports of Los Angeles and Long Beach had dozens of container ships idling offshore because there was no room to unload them. Now the two biggest container ports in the U.S. are pleading for the return of importers who are avoiding the West Coast because of unresolved labor talks.

The volume of import containers in LA in October dropped 28% from a year ago, the port announced Tuesday. Down the road in Long Beach, imports had fallen 24%.

The biggest factor behind this steep decline is that cargo has shifted to ports on the Gulf of Mexico and the Atlantic seaboard because of the protracted labor negotiations between the longshore union and the terminal operators on the West Coast, Gene Seroka, executive director of the Port of LA, said during a media briefing.

The port's container terminal are only at 70% capacity now and LA is eager to ramp the cargo volume back up, according to Seroka.

"It all begins and ends right now with that labor contract," Seroka said. "Once we get that done, it will give the confidence back to the market to start bringing cargo back this way."

The negotiations between the Pacific Maritime Association, representing the terminal operators and ocean carriers, and the International Longshore and Warehouse Union, representing 15,500 registered dockworkers, started this past May and so far have not yielded a new contract. Big retailers worried about a strike or lockout that could cripple their supply chains have brought in as much merchandise as they could to protect themselves against any shortages should the West Coast ports shut down.

The maritime association had insisted before the start of the negotiations that the West Coast ports need to be automated to remain competitive, to facilitate cargo and job growth and to reduce greenhouse gas emissions. The union by contrast has repeatedly said that the employers' desire to automate the terminals will be at the expense of union members' jobs.

Both sides have said that they want to avoid disruptions at the container terminals, and there has been near-total radio silence about the status of the negotiations other than an isolated union outcry about a Seattle terminal operator causing disruptions. Still importers are taking no chances and have been rerouting their cargo to avoid the West Coast ports, according to Seroka.

Outgoing LA Mayor Eric Garcetti, who joined the port's media briefing, said he was confident there wouldn't be a strike and urged the union and the terminal operators to get a new labor agreement wrapped up sooner rather than later because it is in both sides' interest to keep the business on the West Coast.

"We were all optimistic it would be done just after Labor Day," Garcetti said. "It has now dragged on a couple of more months — let's knock this out, let's get this done."

Seroka added he had been flying across to the U.S. to meet with importers on the East Coast and in the Midwest to keep them informed about what was happening in the port and to persuade them to bring their cargo allocations back to LA.

"This knocking on doors isn't going to stop until we get the cargo back," he said.

Additional reasons for the big slowdown in imports last month, according to Seroka, include the fact that many importers brought in their merchandise for the holiday season earlier than normal this year and that U.S. consumers have cut back on buying big-ticket items such as furniture and appliances — major drivers of imports during the Covid-19 pandemic. Concerns about a recession, inflation and higher interest rates also contributed to the lower cargo volume, Seroka said.

November and December will be soft as well, Seroka predicted.

Follow @edpettersson

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