LOS ANGELES- The leader of the busiest US seaport on Friday said February’s cargo volume hit the lowest level since the start of the pandemic as inflation and economic upheaval hurt demand, and signaled that activity may not pick up until the second half of this year.
“This is a global phenomenon. We may not be at the height of the pandemic, but there are more container vessels sitting idle around the world today than at any time since it began,” Port of Los Angeles Executive Director Gene Seroka said on Friday.
He and other ocean shipping experts say a turnaround won’t come until retailers and other cargo owners clear clogged US warehouses to make room for new shipments.
Executives at Walmart, the largest US importer of containerized goods, say they have made progress clearing unsold goods. Nevertheless, they remain cautious about consumer spending as inflation gobbles up money otherwise spent on goods, and recession and other “unknowns” threaten.
Meanwhile, importers are selling products for pennies on the dollar to liquidators or offering steep discounts in customer email blasts. Still others have thrown up their hands.
Bobblehead maker Funko earlier this month said it was destroying $30 million to $36 million of toy products from its overstuffed distribution center in Arizona.
The Port of Los Angeles handled 331,811 20-foot (6-meter)equivalent units (TEU) of goods in February, a 36 percent year-over-year drop led by plummeting imports.
Seroka expects first-quarter volumes to be down roughly 33 percent from last year and about 20 percent below the five-year average before starting to improve in the third quarter.
“How much (improvement) remains to be seen,” said Seroka, who added that ongoing West Coast port labor talks are also weighing on results.
The U.S. trade deficit widened moderately in January as both imports and exports increased strongly.
The trade deficit increased 1.6 percent to $68.3 billion, the Commerce Department said on Wednesday. Data for December was revised to show the trade gap widening to $67.2 billion instead of $67.4 billion as previously reported. Economists polled by Reuters had forecast the trade deficit rising to $68.9 billion.
Part of the widening in the trade gap likely reflects renewed increases in the prices of goods and commodities.
Imports increased 3.0 percent to $325.8 billion, with goods surging 3.7 percent to $267.9 billion. Imports of motor vehicles, parts and engines were the highest on record.
Consumer goods imports rose $4.1 billion, lifted by increases in cellphones and other household goods as well as pharmaceutical preparations, toys, games and sporting goods.
Capital goods imports increased $1.4 billion, reflecting rises in electric apparatus and telecommunications equipment.
Imports of services edged up $0.1 billion to $57.9 billion, mostly driven by travel. Transport services fell.
Exports shot up 3.4 percent to $257.5 billion. Goods exports jumped 6.0 percent to $177.8 billion. Exports of capital goods were the highest on record, as were those of consumer goods, motor vehicles, parts and engines. – Reuters
