Port of Long Beach cargo drops amid tariff concerns: Latest figures down by 10% compared to last year

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Port of Long Beach cargo drops amid tariff concerns: Latest figures down by 10% compared to last year

The Port of Long Beach

The Port of Long Beach

Courtesy The Port of Long Beach

The Port of Long Beach

Courtesy The Port of Long Beach

Courtesy The Port of Long Beach

The Port of Long Beach

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The Port of Long Beach (POLB) reported last week that cargo-container shipments passing through the port are down by 10% compared to the same time last year, mostly caused by reduced imports and fewer empty containers being shipped to Asia to be loaded with goods.

Lee Peterson, POLB’s media-relations managers, told the Signal Tribune that most of that reduction is because last year, imports had increased unusually in advance of new tariffs on Chinese goods.

“Previous announcements of tariff increases have been made far enough in advance to allow shippers time to react— to rush imports, for example,” he said. “We are now starting to see the reduction of shipments because a [tariff] agreement has not yet been reached.”

Measured in 20-foot long cargo-container equivalent units, or TEUs, the port saw a nearly 14% reduction in imports in June, or 331,617 TEUs compared to 384,095 last year. In addition, 21,208 (or 9%) fewer empty containers were shipped to Asia to be loaded with goods compared to last June. Export volume remained relatively the same.

For its 2019 fiscal year, POLB projects that total imports will be 4.2% lower than in 2018, and exports will be 10% lower, primarily due to tariff concerns in both the U.S. and China.

“The story we saw develop in 2018 was retailers forwarding goods to beat tariffs,” POLB Executive Director Mario Cordero said in a statement. “For 2019, it seems that the cargo is all here and warehouses are filled. That’s disrupting container movement and the growth we would normally see this time of year.”

Last year’s June activity was, in fact, the highest the 108-year-old port had ever seen, with more than 752,000 containers processed compared to about 677,000 this past June.

Data courtesy Port of Long Beach
Chart measuring Port of Long Beach container trade in TEUs (20-foot equivalent units), showing a decrease in imports in June 2019 compared to June 2018

Though comparatively lower, last month was still the second-best June for the port, POLB said.

“Right now, we are definitely seeing a tariff-related disruption of the cargo growth we would expect this time of year,” Peterson said. “Warehouses are full of goods, because retailers stocked up ahead of expected higher tariffs. That product needs to move to market before more is ordered.”

Meanwhile, the Port of Los Angeles (POLA), POLB’s larger neighbor and competitor, announced last week that its June cargo volume was up by nearly 6% over the same time last year, for a total of about 765,000 TEUs.

Opposite of POLB, imports through POLA increased by 3.5% to 396,307 TEUs in June compared to last year, though exports decreased by 5.6% to 139,318 TEUs, POLA said in a statement. Empty-container volume increased by 19% to 229,153 TEUs.

So far in 2019, POLA’s overall volumes have increased 5.3% compared to last year, when it set an all-time cargo record, POLA said.

“Completing the busiest 12-month period in the port’s history makes me proud of our extraordinary capabilities and grateful to all our stakeholders,” POLA’s Executive Director Gene Seroka said in a statement. “With container exchange per vessel at record levels, we will continue to enhance and optimize our port complex in the coming months.”

Peterson said that part of the reason for POLA’s increases is that ocean-carrier shipping alliances shifted some vessels to POLA in June.

There are also differences between the two ports in terms of types of cargo each primarily sees coming through.

POLA’s top five imports last year were furniture, auto parts, clothing, footwear and electronics, according to its trade-statistics summary. Exports mainly consisted of paper, animal feed, fabrics and cotton, soybeans and scrap metal.

For POLB, crude oil tops its list of imports, followed by electronics, plastics, furniture and clothing, according to its website. Top exports consist of petroleum, chemicals, waste paper and foods.

Though POLB’s imports are generally down by 9% so far this year, no single category is lower, Peterson said.

“Not any one item stands out,” he said. “For exports, certain commodities are down, such as waste paper, which China has decided to import less of.”

Since last year, China’s ban on certain recyclables has caused exports of waste paper, plastic scrap and metal scrap to plummet, according to media reports.

On the other hand, tariffs on garlic from China has been a boon to California garlic growers, according to media reports, though almond growers have been hurt by higher Chinese tariffs on U.S. nuts.

Though solar panels and washing machines have been identified as products that could be especially impacted by tariffs on Chinese imports, those affects have not yet been felt locally.

At the Home Depot in Signal Hill, an appliance employee who wished to remain anonymous for employment reasons said that he hasn’t seen any changes in sales, mostly because the majority of appliances the store carries are made in America.

“The only imported appliances are Korean— Samsung and LG,” he said, adding that other brands, including those from China, are only sold through Home Depot online.

However, the employee surmised that while tariffs on appliance parts haven’t yet made a significant difference to their prices, there may yet be affects down the road.

“It’s just like a car, there are pieces from all over the world to make them,” he said. “But when the manufacturer advertises, they say it’s assembled in America.”

Since last July, the Trump administration has increased tariffs on Chinese goods by 25%, which led China to retaliate by increasing tariffs on U.S. exports to China by anywhere from 5% to 25%.

So far, the U.S. has assessed $250 billion in additional tariffs on Chinese products while the Chinese have similarly taxed $110 billion worth of U.S. goods, according to a Congressional Research Service report of June 26. U.S. exports to China dropped by nearly 20% in the first quarter of 2019 compared to last year, and imports from China by nearly 14%, the report states.

China is by far the top trading partner for both ports.

“If trade is reduced in the long term, we know there will be impacts,” Peterson said. “In Long Beach, 51,000 jobs are connected to the Port of Long Beach. In Southern California overall, 575,000 jobs are connected to the trade, tourism and construction at this port, either directly or indirectly.”

Peterson also said that POLB is proactively reaching out to Southeast Asia and other markets to enhance connections with trading partners.

“We are also working with our trade officials and representatives to communicate the positive impacts and benefits of trade,” Peterson said, adding that the port continues to make investments to its infrastructure and systems to attract business, regardless of the tariff situation between the U.S. and China.

“We are optimistic,” he said, “that the two sides can resolve the issues involved.”