Contrasting Fortunes: Southern California Ports Grapple with Declining Volumes as Other U.S. Ports Experience a Rebound

Southern California’s ports, which form the largest complex in the United States, have been facing significant declines in container volumes throughout the year, as confirmed by the latest monthly report. Port executives had anticipated that it would take time to recover their position following the labor settlement. However, while other ports reported increases in July, the ports of Los Angeles and Long Beach experienced notable declines compared to their record volumes in July 2022.

Los Angeles reported a 27 percent decrease in container movement in July, with a total of only 684,291 TEUs (twenty-foot equivalent units). This figure represents the third-lowest monthly total of 2023, similar to the volumes observed in February and March. Compared to June, the total volume dropped by nearly 18 percent, despite June being the port’s strongest month this year. Imports witnessed a significant decline of 25 percent in July, while exports increased by six percent compared to the low levels observed in July 2022. The departure of empty containers from the port also reflected the decline in import volumes and Chinese trade, with a decrease of 39 percent compared to 2022.

Similarly, the neighboring Port of Long Beach experienced comparable declines in July. The port witnessed a year-over-year volume decrease of over 26 percent. Following a substantial decline in June, the port’s overall volume further decreased by three percent in July. Both imports (27.9 percent) and exports (17.6 percent) saw significant declines.

While the ports in Southern California continue to face soft volumes, other ports across the United States are reporting rebounds. In Oakland, California, the port experienced its highest volumes since October 2022. Full TEUs increased by 16.8 percent last month compared to the previous year. Imports rose by 12.5 percent, and exports, which were working from abnormally low levels in 2022, jumped by 23 percent. However, the export volume remained lower than the monthly average in 2023.

In the past year, executives at West Coast ports have consistently pointed to cargo being diverted to other ports due to extended labor contract negotiations and disruptions that occurred in the final weeks of the negotiations, leading into July 2023. It was expected that it would take months for shippers to adjust their plans, and despite the delays at the Panama Canal, cargo volumes continued to shift eastward.

The Port of Houston, for instance, reported its highest-ever volumes for July. Container volume increased by five percent year-over-year, with a four percent rise in imports and a 15 percent increase in exports. The port has been experiencing a strong trend in exports throughout the year, driven by high demand for resins. Similarly, the Georgia Ports Authority reported a 17 percent increase in container volume from June to July 2023 for the port of Savannah, while Charleston, South Carolina reported a 12 percent increase in container volume between June and July, along with a three percent year-over-year increase.

The major carriers in the shipping industry have projected subdued volumes and anticipate only small, if any, rebounds in the near term for container volumes. These forecasts indicate that the expected increases in container volumes will be gradual, presenting additional challenges for the Southern California ports as they strive to regain their leadership position in the industry. The slow pace of volume recovery poses ongoing difficulties for the ports in Southern California as they navigate the competitive landscape and work towards rebuilding their market share.

Written by Ken Miller, President of StateWay Logistics