U.S. West Coast ports have been humming, clocking up double-digit gains in container throughput.

Chances of a significant further increase in volume are causing concerns about congestion, though, especially in the event of a work stoppage paralyzing rail traffic in Canada that would push imports to U.S. West Coast gateways.

Consumer demand remains the chief engine of growth, but several other factors also favour rising volumes along the coast. With a labour contract in place – while ports in the east are facing possible works stoppages later this year – plus vessel diversions in response to major disruptions and the prospect of a strong hurricane season in the Gulf of Mexico, West Coast ports seem a safer bet for cargo owners at the moment. Moreover, the threat of a rail strike in Canada has resulted in a build-up of containers at the port of Vancouver.

Vessel operators have signalled plans to divert sailings away from Canada’s largest gateway to U.S. West Coast ports in the event of a work stoppage.

The port of Los Angeles has been overtaken by Laredo, Mexico, as the largest gateway for U.S. imports, reflecting the rising role of Mexico in the wake of nearshoring, but the port has regained momentum after the decline in cargo volumes of 2022.

In April overall cargo volume was up 12% year-on-year, marking a ninth consecutive month of expansion. Loaded imports climbed 21%, while loaded exports surged 51%. 

Over the first four months of the year, Los Angeles processed over 3.1 million TEUs, an increase of almost 25% from a year earlier and 5% higher than the port’s running five-year average.

Neighbouring Long Beach clocked up a 14.4% gain in containers in April. For the January-April period, it reported a 15.8% increase to 2.75 million TEUs, with imports rising 16.3%, while exports sank 19.9%. At the port of Oakland, container volume in the first four months of the year rose 17%.

Loaded imports climbed 7.5% in April, and box exports increased 6.9%. Up the coast, the Northwest Seaport Alliance saw a relatively modest 2.9% growth in container volume in the first quarter, but the pace accelerated in April with a jump of 11.3%.

In part, this growth reflects the return of cargo streams that had been diverted to ports on the East and Gulf Coasts in 2022 as cargo owners were worried about work stoppages in the labour contract negotiations between West Coast terminal operators and labour.

With a new contract signed last year, the spectre of labour disruption was banished for five years. Now it is the eastern ports that are facing the prospect of work stoppages as the International Longshoremen Association and the United States Maritime Alliance, representing labour and employers on the East and Gulf Coasts, are about to face off for their contract negotiations.

Early rhetoric has suggested a confrontational stance and little willingness to budge on controversial points from remuneration to terminal automation and work jurisdiction.

So far, few cargo owners have moved to shift significant volumes to the West Coast. In a media briefing in mid-May Gene Seroka, executive director of the port of Los Angeles, reported conversations with cargo owners that these had “shifted fractionally back towards the West Coast”.

He estimated that between 2 and 5 percent of cargo had moved back to the western gateway. He expects this trend to gather momentum in the coming weeks and declared the port ready for it.

“We’re ready to upscale on demand as we move into the second half of 2024,” he stated. “All our vital operational statistics at the port of Los Angeles are at or better than pre-Covid levels.”

According to ITS Logistics, which produces a monthly update on terminals and railheads, some statistics could be better.

Its April Port Rail Ramp Index reported “significant dwell times” for containers “as rail provider equipment is out of balance due to increased demand for East Coast freight arriving to the U.S. West Coast”.

The May issue of the index noted continuing inland point intermodal (IPI) container dwell challenges at the Los Angeles/Long Beach port complex and predicted more stress from the potential Canadian rail strike and ongoing diversions of containers from the eastern U.S. gateways.

“All rail operations throughout North America are being moved to a severe concern due to the potential labor disruption in Canada and IPI congestion in Los Angeles/Long Beach,” warned Paul Brashier, vice president of drayage and intermodal.

Forwarders as well as rate and booking portal Freightos have reported increased demand for sea freight capacity out of China prompted by signs of restocking in Europe and concerns about disruption that have prompted U.S. importers to move early on part of their peak season traffic.

Combined with stretched vessel capacity and equipment shortages building up at Chinese ports, this heralds a growing risk of capacity bottlenecks resulting in skipped port calls with a likely increased focus on major gateways, a scenario that could strain capacity at Los Angeles/Long Beach and the rail infrastructure.

“The best operational plan to avoid these challenges is to terminate imports at the port of entry and use dray off, transload and one-way trucking to get freight into DC networks,” commented Brashier.

ByIan Putzger

Correspondent | Toronto