The ports of Los Angeles and Long Beach are bracing for another cargo surge later this spring as earlier-than-usual back-to-school and peak season imports collide with an anticipated backlog of freight from mainland China once Shanghai emerges from its COVID-19 lockdowns.
Meanwhile, warehouses in Southern California are already operating near capacity handling merchandise for inventory replenishment, which means they have little space available for the next import surge. That means arriving imports will be forced to sit on the docks until space becomes available at the warehouses.
Gene Seroka, executive director of the Port of Los Angeles, told a virtual press conference on Apr. 12 there were 46 container ships headed to Southern California, which is about normal for this time of year. But that number will increase soon enough as already-arriving back-to-school shipments, followed by early holiday merchandise imports, eventually collide with a delayed spike in shipments from Shanghai when COVID-19 lockdowns restricting goods movement in and out of the world’s busiest port are lifted.
“We expect a pretty quick recovery [in volumes],” said Seroka.
Although retailers are projecting a 5.3 percent year-over-year (y/y) decline in US imports in May owing to the COVID-19 lockdowns in Shanghai, they project a rebound beginning in June. Global Port Tracker, which is published by the National Retail Federation and Hackett Associates, forecasts that US imports will increase 5.2 percent in June, 5.6 percent in July, and 3.3 percent in August y/y.
Retailers ‘burned’ last year
Imports for the new school year beginning in September already started arriving in April, said Scott Weiss, vice president of business development at third-party logistics provided Whiplash. Back-to-school merchandise traditionally began to arrive at the ports in May, he said.
“A lot of people got burned last peak season, so retailers are bringing in as much product as they can now,” said Weiss.
Weiss also noted that inventory replenishment continues at a brisk pace as high inflation has not affected consumer spending. He said some retailers are experiencing out-of-stock issues even though their warehouses remain full.
Higher gasoline prices, however, are affecting labor availability in the warehouse sector, Weiss said. Some workers in the hourly wage category feel they cannot afford current gasoline prices, so they are simply not showing up to work, he said.
“For anyone who’s earning about $15 an hour, the price of gas is a big hit,” said Weiss.
Contact Bill Mongelluzzo at [email protected]