By Augusta Saraiva and Ana Monteiro (Bloomberg) —
The Port of Los Angeles, the US’s busiest, is preparing for the early arrival of the 2022 peak season for cargo as retailers stock up on back-to-school and fast-fashion products despite high inventory levels, Executive Director Gene Seroka said.
“The upstream orders coming from Asia — getting ready for an early arrival of peak-season goods — look strong; the June numbers will be very healthy,” Seroka said in an interview on Bloomberg Television Friday. He added that the port handled just under 970,000 units of cargo in May, making it the operation’s third-busiest month on record.
Retailers have been building up inventories amid soaring consumer demand and transportation bottlenecks, but many including Target Corp. and Walmart Inc. are trying to figure out how to sell all their products as people shift to spending more on services over goods.
“The cargo keeps going because the consumer keeps buying. Those inventory levels have to be built up across a wide spectrum of retailers and importers,” he said. The shipments due to arrive are not necessarily the product that is going to be looked at for discounting and pushing out, but are instead seasonal goods specific to the second half of the year, such as back-to-school items.
“What we’ll also see is cost-minded consumers looking for the necessary bargains to put food on the table for dinner. We may be buying hamburger instead of steak, beer instead of fine wines. We’re going to keep buying; our savings accounts are fairly high.”
President Joe Biden visited the port Friday to highlight the White House’s push to smooth out the supply-chain crunches that have stoked the hottest inflation since 1981.
The president and his administration have helped since last year to reduce massive backlogs at the twin ports of Los Angeles and Long Beach, which handle 42% of containerized trade with Asia. The gateways have been bracing for an earlier-than-normal peak season in shipping, which usually starts in July ahead of the holiday season.
The easing of port congestion in Shanghai is expected to unleash a wave of containers on the US West Coast that could clog supply chains further.
This year, it’s likely to coincide with what some port chiefs say will be an increase in cargo arrivals that had been held back from the US because of the lockdowns in Shanghai and surrounding areas, as well as the expiration of labor contracts for 22,000 dockworkers across 29 ports in California, Oregon and Washington.
“What we’re going to see here in the next month or two is an accelerated number of calls for the volume that did not come during the ‘zero policy’ lockout slowdown,” Long Beach Executive Director Mario Cordero told Bloomberg Television in a separate interview, citing disruptions in transportation and labor shortages across the Pacific. “While it’s fair to say that the ports in China were not closed, it’s also fair to say that the supply chain there was rather chaotic.”
Seroka has said cargo flows from China have been consistent despite the lockdowns, with freight moving through the Yangshan and Ningbo while Shanghai operations were shuttered.
Los Angeles “did not see the precipitous drop in cargo that some observers had called for –the ports and central government had prioritized this long haul cargo coming to Los Angeles, the southern California ports,” Seroka said. “And now we’re starting to see just a little bit of an uptick, which are the peak-season goods.”
The Los Angeles port chief said dockworkers and employers are unlikely to reach a new contract by the expiration of the current one on July 1, but both sides have committed to keep operations running.
“They’re going to continue to work as hard as they can at the table while everyone is out moving cargo,” Seroka said, adding he doesn’t see a strike on the cards. “We don’t want any disruptions to the American supply chain.”
–With assistance from Alix Steel, Ed Ludlow and Tom Mackenzie.
© 2022 Bloomberg L.P.
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