Eugene Seroka, Executive Director, Port of Los Angeles said the Port processed 960,597 TEUS (twenty-foot unit containers) in August up 16% from a year earlier but added that the Port could handle up to 1.2 million TEUs if the need arose: “I believe now with all the simulation we've done, our capacity will be at about 1.2 million TEUs… So, if we're handling … 960,000 container units, now … we're at about 80% of capacity.”
Seroka, who spoke at the Port’s September 18th media briefing, noted that several factors are currently driving the surge of business at the Port of Los Angeles: “Just to give you some perspective on how busy we were in August, we had 97 container vessels calling the Port, the highest number in four years. Thirty-two of those ships had a capacity of more than 10,000 TEUs setting another record here in LA …. Imports led the way with 509,363 twenty-foot equivalent units (TEUs). That is our third highest total ever and nearly 18% more than last year. We've now had back-to-back months where imports have eclipsed the half million mark. As I mentioned, this elevated volume, some of which is typically headed to other gateways, has been coming our way for several reasons: First, underlying economic indicators remain strong, and today's just announced interest rate cut (by the U.S. Federal Reserve) should boost U.S. consumer confidence. Second, extended labor negotiations at East and Gulf Coast ports have prompted importers to reallocate some of their cargo out West. And lastly, ongoing security concerns in the Red Sea combined with lingering drought conditions in the Panama Canal are influencing many shipper's decisions.”
Diversions to West Coast?
Goldman was asked by reporters about diversions of cargoes away from East and Gulf Coast ports and toward West Coast ports in advance of a possible strike by longshore workers represented by the International Longshoremen’s Association (ILA) at U.S. East and Gulf Coast ports.
Goldman responded: “The reality (of) diversions is (that) … we as an ocean carrier, do not dictate diversions. This is dictated and mandated by our customers. They are the ones that will tell us if they want to divert.”
Goldman added that: “There are zero ships that I'm aware of that will be diverted to the West Coast. As of right now, customers have made that decision. They are the ones who will guide us as to … what is the best avenue to pursue … if within our network, our global network, we have existing ships that are somewhere else that are currently going to the West Coast … cargo may flow from an origin point there and not (be) diverted.”
Strike and Response
Both Laura Curtis at Bloomberg and Lisa Baertlein at Reuters asked Goldman how long a strike could go on without seriously impacting supply chains and what are shipping lines doing to prepare.
Goldman responded: “One day is too long of a shutdown. The reality is that we're in a fluid supply chain process. The moment you close the door, things begin to back up. So, we are not in any in any way looking forward to having any shutdown on any coast. So, the preparations … needed are really on the back end to work with our customers to communicate, keep an eye on it, and … do what we can from that standpoint.”
Seroka said the threat of a longshore strike has the attention of the Biden Administration: “I know the Administration is watching this very closely and like always, engaging with principals to try to make sure folks stay at the table, keep talking just like we've seen out here in the West with the ILWU, (International Longshore and Warehouse Union representing dock workers at West Coast ports). This has been a long time coming to make sure that our workforce is paid appropriately coming off of all the work they did during the COVID surge. And it's not just in our industry, but across a broad group of organized labor forces that have been going to work, day in and day out, to help this American economy … Obviously President Biden has said this many times, he's America's union president and he's going to keep the interest of the workforce in mind.”
Delays in Rail Moves
One problem impacting the Port of Los Angeles’ surge capacity is delays caused by the two main railroads: Burlington Northern Santa Fe Railway (BNSF) and the Union Pacific Railway. The two railroads’ inability to move containers expeditiously off the docks at Los Angeles contributed to the traffic jam of ships waiting to unload during the surge of imports that occurred during the Covid pandemic in 2021.
Seroka said there have been renewed delays in 2024: “Right now, the rail dwell times for on-dock (rail) are at 8.4 days. It's about double where it should be at the very least during Peak season. And again, talking with our friends at both the Union Pacific and the BNSF, they have a laser focus on working down that number from a dwell time perspective.”
Challenges for Green Fuels
The Port of Los Angeles recently hosted the naming ceremony for the green methanol powered Alette Maersk. Maersk's CEO, Vincent Clerc, has asked major ports to offer green fuels such as methanol and ammonia to support low emission/ green shipping. Seroka was asked about what steps that the Port of LA needs to take to offer green methanol and green ammonia fuels to ships sailing to and from Los Angeles.
Seroka responded: “It's my belief the Port of Los Angeles has to be in the game with the modernization of these vessels and the ability to start testing out these ships like the Alette Maersk. It was interesting because this ship had a number of calls and then its last stop was in Xiamen, Fujian Province in China and (it) made it all the way here using … green methanol. Now, just like we're doing in other sectors, it's going take a lot of work on the infrastructure side. So, where we have aspired to get to zero emissions cargo handling equipment by the year 2030 and heavy-duty trucks by the year 2035, it's still early days in the manufacture, the affordability and the confidence level that the users of this equipment will have, that they can fuel up, charge up and keep commerce moving across America. Now, here in California, the permitting process is quite unique. A number of steps have to be taken in that area and considerations as we live in a community of more than 260,000 residents. But again, we are going to keep pushing the envelope on this subject because getting to zero emissions on these vessels is a primary goal of ours. As part of the ‘Green Shipping’ corridors, now we have relationships with no fewer than nine ports in the Asia Pacific market to help bring private sector interests like CMA CGM and others together and begin testing these alternative fuel methods that work … If we can cut the pollution on ships by 10% in the Shanghai to Southern California lane, that would be equivalent to all the pollution at the Port of Los Angeles in one year.”
