Large swings in Port of Los Angeles container traffic numbers have one port official saying a U.S.-China trade agreement can’t come soon enough.
Whether that will happen remains unclear; reports earlier this week of an interim deal were contradicted Friday by President Trump.
This year, the port saw a 19.1% year-over-year drop in port container traffic in October to 770,189 twenty-foot equivalents, a measure of the ship’s cargo capacity, according to port officials. Imports decreased 19.1% to 392,768 TEUs compared to the previous year. Exports declined for the 12th consecutive month 19.3% to 140,332 TEUs.
“With 25% fewer ship calls, twelve consecutive months of declining exports and now decreasing imports, we’re beginning to feel the far-reaching effects of the U.S.-China trade war on American exporters and manufacturers,” said Gene Seroka, the port’s executive director. “We expect soft volumes in the months ahead and with the holiday season upon us, less cargo means fewer jobs for American workers. We need a negotiated settlement and the tariffs lifted.”
Seroka will unveil a new study Tuesday at the National Retail Federation in Washington D.C. that the port says indicates the potential for widespread negative economic impact on jobs, trade and consumers throughout the country. Jonathan Gold, spokesman for Americans for Free Trade, Angela Hofmann, co-executive director of Farmers for Free Trade and Rufus Yerza, president of the National Foreign Trade Council President, will also speak.
Total volumes are up 1.8% year-to-date through October, compared to the same 10-month period a year ago, according to port data. The port saw a huge spike in traffic in October 2018 as cargo owners imported cargo at a record pace to get ahead of expected tariffs. The trend saw warehouse space in the region bursting at the seams, according to port officials.
“There has been all this talk about a trade deal coming,” said Phillip Sanfield, a port spokesman. “From our perspective, it can’t come soon enough.”
The maritime industry doesn’t deal well with uncertainty and it has stunted investment by terminal operators over the past 18 months, Sanfield said.
So far, the uncertainty hasn’t affected the port’s double-A ratings, which were affirmed by all three rating agencies with a stable outlook ahead of the port’s $165 million sale of revenue refunding bonds in August.
“The port has substantial exposure to trade with China, which accounts for over 50% of two-way container trade by cargo value,” Moody’s wrote in its ratings report. “We view the uncertain evolution of current trade tensions between the US and China as a risk, but believe this can be managed by the port’s strong financial position along with our expectation of stability, if not a strengthening, of the credit profile over the next five years.”
The port’s strong financial position, supported by robust liquidity, strong cash flow margins and high levels of minimum revenues from long-term leases “will mitigate the potential credit impact of lower volumes from trade tensions with China and/or economic deceleration,” Moody’s wrote.