Seroka: Shippers ‘fractionally’ shifting to West Coast amid ILA talks

As labour contract negotiations between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) kick into gear, West Coast ports are experiencing a slight migration of cargo from East Coast counterparts.

The talks were launched on May 17 and are expected to be completed by September 30 when the current contract expires.

ILA comprises 85,000 members at ports across the Atlantic and Gulf Coasts, U.S. and Canadian Great Lakes, major U.S. rivers, Puerto Rico, Eastern Canada, and the Bahamas. Meanwhile, USMX represents employers in the East and Gulf Coast longshore industry, including container carriers, major marine terminal operators, and port associations.

According to Gene Seroka, CEO of the Port of Los Angeles, shippers are diverting approximately 2-5% of their cargo routes westward amidst concerns over the availability of vessels and empty containers ahead of the peak season.

As explained during a recent media briefing, the uncertainties in labour negotiations on the East Coast, coupled with strategic concerns in key global shipping routes such as the Red Sea and Suez Canal, have prompted importers and exporters to ‘fractionally’ shift back to the U.S. West Coast.

“The East Coast International Longshore Association has not gone on strike since 1977, and while over the past year and a half labour negotiations through a variety of segments in the U.S. yielded great pay increases for the folks who worked so hard during COVID-19, there are demands on the table that are very important and I am confident that they will reach conclusion ahead of the contract’s natural expiry date in September,” Seroka added.

Impact of recently announced tariffs

Regarding the Biden Administration’s latest tariff announcements targeting Chinese goods, Seroka said that the tariffs, targeting US$18 billion worth of goods, “won’t have any real impact to the trade at the Port of Los Angeles”.

Read more: US announces tariff on STS cranes

Daniel Hackett of Hackett Associates, which produces the monthly “Global Port Tracker” report for the National Retail Federation, said that the tariffs are likely to see a continued push of manufacturing out of China to other locations.

Hackett added that the ‘China Plus One’ strategy of diversifying business into other countries in addition to China persists among importers, noting Mexico’s emergence as the top U.S. trade partner and a growing gateway for Chinese imports.

However, China still accounts for about 29% of containerised imports and is still the dominant import origin location on a global scale.

Ongoing shifts in manufacturing bases to Southeast and South Asia, alongside Mexico’s increasing role as a trade hub, are shaping new trade dynamics in the U.S.

Seroka acknowledged the continuing dominance of China, which still accounts for about “50% of all the work here at the Port of Los Angeles.”

“We’ve seen a pattern of increased shipments ahead of tariff deadlines, followed by brief lulls,” Seroka noted reflecting on historical trends following tariffs in early 2018. He pointed out that a similar rush might happen once specific dates are released for the new tariffs, adding that no significant disruptions or cargo losses are likely.

Port figures

Seroka expressed cautious optimism about future trade volumes and operational capacities at the Port of Los Angeles. The port is currently operating at 75-80% of traditional capacity, with the potential to exceed historical throughput, he noted.

“I think that from many lessons that we learned during Covid, we’re going to be able to lift that ceiling on traditional capacity, which has been about a million TEU a month. I see us being able to clear that by some margin in the not-too-distant future,” Seroka added.

Port of Los Angeles handled 770,337 container units in April, a 12% increase over the previous year.

Four months into 2024, waterfront workers have processed 3,150,841 TEU across Los Angeles marine terminals, nearly a 25% year-on-year increase.

“All our vital operational statistics at the Port of Los Angeles are at or better than pre-COVID levels,” said Seroka. “I’ve been urging shippers to take advantage of our fluid terminals and excess capacity. We’re ready to upscale on demand as we move into the second half of 2024.”

April 2024 loaded imports landed at 416,929 TEU, up by 21% year-on-year, while loaded exports came in at 133,046 TEU, an increase of 51% year-on-year.