The leader of the busiest US seaport on Friday said February's cargo volume hit its lowest level since the start of the epidemic, as inflation and economic upheaval hurt demand and signaled that activity may not pick up until the second half of the year.
This is a global phenomenon. We may not be at the height of the epidemic, but there are more container vessels sitting idle today than ever since it began, according to Gene Seroka, Port of Los Angeles Executive Director.
He and other ocean shipping experts say that a turnaround won't happen until retailers and other cargo owners clear clogged U.S. warehouses to make room for new shipments.
Walmart, the largest U.S. importer of containerized goods, said they have made progress clearing unsold goods. Consumer spending is kept under control because inflation gobbles up money that would otherwise be spent on goods, and recession and other unknowns threaten, and they remain cautious.
The importers are selling products for pennies on the dollar to liquidators or offering steep discounts in customer email blasts. Some people have thrown their hands.
Bobblehead maker Funko said earlier this month it was destroying $30 million to $36 million of toys from its overstuffed distribution center in Arizona.
The Port of Los Angeles handled 6 meter equivalent units of TEU of goods in February, a 36% drop over the year in February, due to plummeting imports.
Seroka expects first-quarter volumes to be down about 33% from last year and about 20% below the five-year average before starting to improve in the third quarter.
Seroka said that ongoing West Coast port labor talks are also weighing on results, and that there is still time for improvement to be seen.