Another Import Surge Expected in Southern California
The ports of southern California made progress in clearing containers and shortening their vessel queue recently. But those gains could come undone by summer.
Operators at the ports of southern California expect more heartburn for shippers. A combination of whiplash from China’s lockdown patterns and earlier demand for retail inventory threatens to catch the ports of LA and Long Beach in another congestion quagmire.
Bracing for Shanghai Shutdown Whiplash
China’s zero-tolerance on COVID-19 has developed a pattern – an entire city or region will shut down and grind supply chain operations to a halt. A temporary lull in U.S. imports then develops. A wave of containers then follows once the lockdown in China is lifted.
Most recently, Shanghai has seen a lockdown lasting more than three weeks in an effort to help clamp down on local COVID-19 outbreaks. Shutting down its largest city has produced both economic and supply chain consequences for China.
While the Port of Shanghai has remained open, the lack of available trucks has caused a pile-up of containers. Import numbers have dipped at the Port of Los Angeles as a result, further helping the complex catch up on its own congestion issues. However, JOC.com reports that a container volume surge is expected by June. Once the Shanghai lockdown is lifted, those backed up containers will head across the Pacific, putting ports of LA and Long Beach at risk of major congestion again.
Retailers Stocking Up Inventory Earlier
The other factor risking a port congestion relapse is American retailers’ urgency to stock inventories proactively.
Last year retailers found themselves short on inventory during the annual peak sales season. That did not stop consumers from breaking purchasing records. But retailers were still knocked on their heels. This year, JOC.com reports, they are taking a more proactive approach and importing both back-to-school and peak holiday season inventories well ahead of typical schedules.
In short, the ports of Los Angeles and Long Beach are seeing higher retail volumes earlier in the year.
Trouble Ahead After LA-LB Port Progress
A brief reprieve has allowed the ports of LA and Long Beach to reach a semblance of normalcy this spring. But ominous signs point to an imminent summer backslide. With retailers scrambling to secure inventory early and an imminent easing of pandemic restrictions in Shanghai, import container volumes are likely to spike soon.
To make matters worse, warehouses in southern California remain near peak capacity. When the surge arrives, containers will undoubtedly spend time waiting at terminals.