Port of Los Angeles sees strongest Feb on record amid container import surge

Houston — The Port of Los Angeles handled 799,315 twenty-foot equivalent units (TEU) in February, as the historic container import surge into North America continued, the port said March 16.

This was an increase of 46.9% from the same month last year, when the coronavirus outbreak caused Asian exporting hubs to shutter and consumer demand for containerized goods dropped precipitously.

February volumes at the port marked the seventh consecutive month of year-on-year increases, driven largely by one-way trade imports. The port has averaged about 900,000 TEU per month over this period, a record in itself.

"Consumer buying has not let up, with vaccines and stimulus checks in the mail, there are more options for American buyers," said Gene Seroka, executive director of the port, during a virtual conference March 16.

The port recorded 412,884 loaded TEU imports, up nearly 53% on the year, as consumer demand for athletic equipment, home appliances, and vehicle parts remained firm, the port said.

At the same time, loaded exports fell by 24.7% to 101,208 TEUs. This has been a trend for the port, with 26 of the last 28 months reporting year-on-year decreases in loaded exports.

"The lopsided trade imbalance is now at historic levels," Seroka said. "We needed a coordinated export plan at a national level."

Unfavorable round-trip economics

To the inverse of loaded exports, empty exports saw significant growth during February. At 285,223 TEU, empty exports grew more than 104% on the year.

This comes as many carriers were heard moving empty containers over full ones in order to accelerate return transit and reloading times.

As export, or backhaul, rates from the North American West Coast to North Asia are significantly less than headhaul rates, there is little economic incentive for carriers to load North American exports, which are typically low-value agricultural products and raw materials.

Platts Container Rate 14 – West Coast North America to North Asia – was assessed March 16 at $650/FEU, significantly lower than the $4,000/FEU headhaul rate.

"Carriers are rushing to get those empties back to manufacturing sites, for quick loading back to the US," said Seroka. "We've got to find an equilibrium."

Congestion eases slightly

As of March 16, there were 17 container vessels in the San Pedro bay, 10 of which were destined for the Port of Los Angeles. This was the fewest ships waiting to unload at the Port of Los Angeles since Dec. 24, 2020, said Seroka.

And average anchorage time was about 7.5 days in February, down slightly on the month. Similarly, average container dwell times at terminals was 4.1 days, down from January.

But land utilization at port terminals remains at about 90% capacity, where a utilization rate of 80% is considered "full capacity," Seroka added.

"To resolve backlog, we need to vaccinate all dockworkers," said Seroka. "Secondly, we need to get cargo off docks, and picked up quickly by the import community."

"There are going to be productivity gains in ports with vaccines, but can carriers dig themselves out of container imbalances?" an ocean pricing manager said. "No, not without demand dropping," he added.