Christmas has arrived early at the ports of Los Angeles and Long Beach.
With the U.S. dollar continuing to surge against Asian currencies, imports from the Far East are pouring into the seaports at a rate not usually seen until the holiday shipping season gets underway during the summer and fall.
March, normally a slow period, was the busiest month ever at both ports, with the volume of inbound containers soaring 34 percent in Long Beach and more than 39 percent in Los Angeles compared to March 1997.
April appears to have been similarly robust, port officials and shipping executives say, although no numbers are yet available. And the surge shows no sign of subsiding.
“It almost appears as if there isn’t going to be a slow season,” said Robert D. Kleist, corporate advisor to Evergreen America Corp., the U.S. division of the large Taiwanese shipping line, which has been operating at or near capacity out of the Port of L.A. for the past two months.
“All of our (inbound) ships are full now, to the brim,” added Karsten Lemke, head of West Coast operations for Zim American Israeli Shipping Co. Inc. “You could not even put one more container on.”
The early surge in imports is being driven by a number of factors, including a strong U.S. dollar, high levels of U.S. consumer confidence, strong demand among manufacturers for components and materials, and an effort by cash-hungry Asian economies to export their way out of their troubles.
What’s more, shipping executives say that the nation’s retailers already are beginning to order holiday merchandise in an effort to avoid the problems suffered last fall, when severe congestion at the ports led to delays of as long as several weeks.
“Importers have realized that they need to open the window further,” said Lemke. “Last year, people got burned. Christmas came and they still had their stuff sitting on the dock. They’ve realized that they need to act earlier.”
Indeed, the gridlock experienced last year continues to haunt the harbor area, and has port officials and shipping lines scrambling to acquire additional space and fine-tune their operations to ensure that trade flows more efficiently this time around.
APL Ltd., for example, which operates the nation’s largest container terminal at the Port of Los Angeles, is adding 18 additional acres of space to its current 235 acres primarily to store empty containers and less time-sensitive export cargo, in order to keep the docks clear for imports.
APL also is considering rerouting some of its Westbound traffic to stop first at the Port of Seattle where the company also operates a new intermodal terminal and discharging cargo there before heading down the coast.
“That would help alleviate some of the pressure on L.A.,” said APL spokesman Gil Roeder.
The unusually heavy spring is not necessarily a preview of what’s in store this fall. Most shipping lines already are operating at capacity, and there is no more space on the ships for additional containers. The only way to boost capacity would be to add more voyages a step few shipping lines appear willing to take.
The growing trade imbalance can be thanked for that. Every ship that arrives in L.A. laden with high-value Asian imports is being sent back carrying far fewer U.S. exports and, even worse, a growing number of empty cargo containers which take up precious deck space but generate no revenue for shipping lines.
Exports in March dropped almost 17 percent at the Port of Long Beach and more than 8 percent in Los Angeles compared to a year earlier a trend that economists and port executives say is likely to continue. The volume of empty containers, meanwhile, jumped 25 percent in Los Angeles and a whopping 82 percent in Long Beach.
“The economics of the business don’t justify adding capacity, even if there is import demand from Asia,” said Roeder, adding that APL probably would turn away business before adding another voyage.
Current activity appears consistent with the 1998 trade forecast released last week by the Economic Development Corp. of L.A. County, which projected that two-way trade through the L.A. Customs District would expand by 2.3 percent this year, largely as a result of Asian turmoil.
The growth in trade, according to the report, will come entirely from imports, which are expected to expand 8.5 percent to $121.3 billion in 1998. But that rise will be offset by a drop in exports, which are projected to plummet 7.5 percent to $68.7 billion this year, reflecting decreased demand among cash-strapped consumers in Japan, South Korea and Southeast Asia.
“Exports will be pretty lackluster,” said Jack Kyser, chief economist of the EDC. The slowdown, he added, will not start to ease until 1999.
