April volumes at Port of Los Angeles and Port of Long Beach see declines

Volumes for the month of April at the Port of Los Angeles (POLA) and the Port of Long Beach (POLB) were both down, according to recent data issued respectively by the ports.

POLA and POLB are the two largest North American ports, and they collectively account for more than 40 percent of U.S. imports. As previously reported, West coast port volumes, especially in first half of 2015, had been uneven, as ports had to work through the backlog caused by the nine-month West Coast port labor dispute between the PMA and ILWU, which reached a resolution in the form of a new contract agreement that was reached in the spring of 2015.

Total April POLA volume at 656,177 TEU (Twenty-Foot Equivalent Units) was down 1.03 percent annually. Imports were up 4.7 percent at 343,574 TEU, and exports at 144,103 TEU were down 1.07 percent. Empty containers at 168,499 TEU were off 10.93 percent. 

While April started the second quarter with a decline, it followed a first quarter volumes that volumes set a new port record at 2,030,982 TEU for an 11.3 percent annual gain. First quarter imports and exports came in at 1,055,433 TEU and 975,549 TEU, respectively.

“We’re encouraged that shippers and supply chain decision makers continue to show confidence in the Port of Los Angeles,” said Executive Director Gene Seroka in a statement. “While the pace of global trade and U.S. retailer imports has eased recently, our work and progress on supply chain optimization has put the Port of Los Angeles on track to drive market opportunities.”

Like POLA, POLB April volumes also followed a strong first quarter, with first quarter volume up 6.1 percent for its best quarter going back to 2007 and was due mainly to solid volumes in January and February. Imports for the quarter were up 6.3 percent at 781,996 TEU and exports were up 6.1 percent at 356,959 TEU.

Total April POLB volume at 478,842 TEU was off 22.1 percent annually. Imports also saw a 22.1 percent decline at 247,316 TEU, and exports dropped 18.5 percent at 112,805 TEU. Empties were off 25.8 percent at 118,721 TEU.

Among the reasons put forth by POLB for softer April volumes were lower-than-expected consumer spending in recent months and evolving vessel alliances that have shifted ship deployments.

“The additional berthing choices offered by vessel alliances are dispersing cargo across more terminals and ports,” Port of Long Beach CEO Jon Slangerup in a statement. “These volume shifts will continue to occur as newly formed alliances take shape. Our long-term outlook remains strong as we continue to invest in our facilities and offer world-class customer service.”

And POLA added that export volumes continue to be impacted by the strong U.S. dollar and slower economic growth, with Q4 GDP of 1.7 percent followed by Q1 GDP of 0.5 percent.

KeyBanc analyst Todd Fowler wrote in a research note that April’s [cumulative] sequential increase was above the five-year average increase of 10 percent, but primarily attributable to weaker March volumes related to the timing of the Lunar New Year.

“On a year-over-year basis, volumes were slightly below our expectations considering more normalized comparisons, reflecting, in our view, elevated inventories,” he said. “Looking ahead, we expect volumes to build sequentially in coming months reflecting normal seasonality; however, we expect year-over-year comparisons to remain soft until excess inventory is worked through the supply-chain.”

This thesis was supported by Ben Hackett, founder of maritime consultancy Hackett Associates and author of the monthly Port Tracker report his firm co-produces with the National Retail Federation.

In an interview, Hackett explained that in recent months there has been little or no growth in real disposable income, as well as consumer spending, with the savings ratio “stubbornly high” still.

“What that tells us is that consumers are not spending money and if consumers are not spending money that means around 70 percent of GDP is impacted by that,” he said. “All signs point to things remaining slow to flat. Our model points to the economy growing 0.3 percent for the full year, with trade volumes lackluster to flat, and consumers are hesitant and still scarred by the recession which is clear with the purchasing patterns we are seeing.”