The tariffs that have been proposed by former President Donald Trump could cost the average American household $4,000 a year or more, according to Matt Shay, President and CEO of the National Retail Federation (NRF).
On October 18th, the Bloomberg Editorial Board also criticized Donald Trump’s plan to put a 20% tariff on all U.S. imports arguing it would “raise prices, provoke retaliation, hobble the economy and impose especially heavy costs on the lower-paid, who’d be least able to bear them.”
Shay was speaking at the Port of Los Angeles media briefing with Eugene Seroka, Executive Director, Port of Los Angeles on October 18th.
NRF Says Tariffs Are a Tax
Shay said that while tariffs have some uses in international trade, many tariffs end up being a tax on the American consumer and he highlighted tariffs proposed by former President Donald Trump as one such an example: “The Peterson Institute for International Economics among others, has done a variety of estimates of what tariffs cost or what proposed tariffs might cost. Existing tariffs cost between $1,500 and almost $3,000 per household. The tariffs that have been proposed by former President Trump could cost the average American household more than $4,000 a year. So, there are trade-offs, and … striking the right balance is the way to look at this. Tariffs as a temporary tool on a strategic basis makes sense, but blanket tariffs on goods that have no production capability in the United States that serve no strategic purpose, that drive up costs for consumers those don't make sense, and it shouldn't be a permanent policy.”
Shay went on to explain: “A tariff (is) not paid by the foreign producer. It's paid when it comes into the country into which it's being imported. So, someone brings a good into this country, if there is a tariff on that, it's going to be paid by the importer. In this case, let's say it's a retailer, and frequently that's going to be passed on to consumers. So, it's ultimately a user tax, or it's a tax paid by the consumer. And, and it's not something that's paid by the foreign producer.”
Third Quarter 2024 Highest in Port Of LA History
The Port of Los Angeles handled a record 954,706 Twenty-Foot Equivalent Units (TEUs) in September, a 27% increase over the previous year. It marked the close of the busiest quarter ever at the Port, which processed 2,854,904 TEUs in the last three months. Nine months into 2024, the Port of Los Angeles is 18% ahead of its 2023 pace.
September 2024 loaded imports landed at 497,803 TEUs, a 26% increase compared to the previous year. Loaded exports came in at 114,702 TEUs, a 5% decrease compared to 2023. The Port processed 342,201 empty containers a 45% jump compared to 2023.
Seroka noted imports remain very strong: “That means in the third quarter, we averaged a record half million imports each month. All these imports led to an efficient busy month on our docks. We averaged 13 container vessels at birth daily in September, which is 35% more than a year ago … While rail dwells have been elevated for some time and we remain actively engaged in finding solutions … The BNSF railway set a new all-time record in September with nearly a half million rail lifts. That is 41% more than last year here in Los Angeles. And it's … thanks to our railroads, terminal operators and government grant partners that the Port of Los Angeles is the preeminent on dock rail gateway in the country.”
Shifting over to the export side, Seroka said the Port “handled 115,000 loaded TEUs in September, which is about a 5% drop from 2023. After more than a year of export growth, we have now seen two slight monthly decreases. This is something we are watching closely as we work with various partners to boost American trade. Meanwhile, empty containers soar to 342,000 units the most since the pandemic surge. This not only opens up space on our terminals, but also positions those empties back to Asia for quick return on the import side of our business.”
Are Some Shippers Shifting Back to Southern California?
Seroka was asked whether there was evidence of a shift of some cargoes from the East and Gulf coasts back to Southern California following the huge 61% wage increase agreement between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) which represents employers at U.S. East and Gulf ports.
Seroka responded by saying “I have not heard anybody saying that they are going to have a quick shift back in allocations to the Eastern/ Gulf Coast based on the tentative agreement. A lot of folks are watching this closely. We have got about a little more than two months to go on the short-term agreement (between ILA and USMX) to make sure we get it right and keep the workforce on the job. But at the same time, there is a lot that goes into this. There are no vessels diverting from the East Coast to the West Coast to the United States. It's simply an … allocation of cargo.”
Seroka said there had been a ‘hedge’ in moving cargoes through the Ports of Long Beach and Los Angeles: “And for months on end, now dating back to last year on a trip to Asia … cargo owners started to tell me they would take fractional amounts of their allocation and shift them towards the West Coast, specifically LA and Long Beach as a hedge to the issues that were happening, whether it was a protracted labor negotiation, the drought conditions in the Panama Canal, or the ongoing security concerns in the Red Sea. All of that underscored by a very strong U.S. economy, continues to bring elevated levels of cargo to us…. So, no change at this point in time, but we're out there. We're working, we're talking to as many people as possible.”
Port’s Rail Delays Remain High
The Pacific Maritime Shipping Association’s October report said that cargo moving through the San Pedro Bay Port Complex “via truck spent an average of 3.21 days at port terminals in September, on par with the October 2023 peak season high. Rail-destined cargo dwell time rose to 9.25 days, surpassing the September 2023 peak season high of 6.54 days and reflecting the high demand of growth in intermodal cargo by nearly doubling the rail dwell from June of this year.”
“In September, the evolving dwell times underscore both the complexity and adaptability of our supply chain as we manage increased cargo volumes,” said Natasha Villa, External Affairs Manager of the Pacific Merchant Shipping Association (PMSA). “The divergence in truck dwell times and rail dwell times highlights the trend in diversifying discretionary cargo across the entire logistics network.”
Seroka was asked how the Port was handling the delays in rail movements by the Union Pacific and Burlington Northern Santa Fe Railroads: “We work with the railroads from the highest level … central to our thinking here is using data to understand how much cargo is coming so we can plan that great skilled labor, the land use and the machinery necessary. And of all the things that we've said, still no backups of vessels handling more cargo than we ever have during this peak season yet.”
Seroka did concede that delays in moving containers is causing some back-ups: “A rail container coming off a ship that gets loaded on dock is sitting about twice as long as it should … And volume is one thing. Cargo coming into certain terminals and exiting from others is … separate. Looking towards harvest season now in the month of October to get even more ag products coming our way is also important. Right now, we've got about 20,000 rail containers sitting on our docks, so waiting, loading of all varieties, and they're moving out.”
Oakland And Long Beach Also Report September Gains
The California ports of Long Beach and Oakland also reported major gains in September.
The Port of Long Beach reported: “Demand for holiday-related goods nudged the Port of Long Beach to its most active September and busiest quarter on record as shippers continued to move goods ahead of a labor contract deadline for seaports on the East and Gulf coasts that resulted in a three-day strike at the start of October.”
Terminals moved 829,499 TEUs “up just 70 TEUs from the previous record set in September 2023. September also marked the Port’s fourth consecutive monthly year-over-year cargo increase. Imports increased 2% to 416,999 TEUs, exports declined 12.8% to 88,289 TEUs and empty containers moving through the Port rose 1.5% to 324,211 TEUs.”
“We have plenty of room across our terminals as the peak shipping season drives a record amount of cargo through this critical gateway for trans-Pacific trade,” said Port of Long Beach CEO Mario Cordero.
Meanwhile, the Port of Oakland’s “loaded container volume recorded a 7% increase in September 2024, compared to the same time last year. For the second month, loaded imports experienced double digit growth. Port operators recorded 10.4% growth, handling 82,180 TEUs (twenty-foot containers) in September 2024, compared to 74,428 TEUs in September 2023. Loaded exports rose 2.9% year over year. Port operators processed 61,466 TEUs in September 2024, versus 59,757 TEUs in September 2023.”
“Oakland has benefited from a final push by importers wanting to ensure supplies for the holiday season,” said Port of Oakland Maritime Director Bryan Brandes. “We expect to have a strong fourth quarter for container volume because it’s also harvest time. We are seeing more agricultural exports going to overseas markets.”
