Port of Los Angeles Predicts Sharp Drop in Imports Amidst Tariff Impact
Speaking on CNBC’s Squawk Box program this morning (April 29), the Port of Los Angeles’ Executive Director Gene Seroka forecasted a “precipitous drop” in volumes coming to the port as the impact of the Trump tariffs begins to materialize. Seroka was the latest in a series of warnings coming from across the shipping industry of the expected sudden drop in imports and the potential impact on U.S. consumers and the economy.
Seroka, who at the beginning of April forecasted the port would see a 10 percent decline in volumes in the second half of the year, said on CNBC that volumes would be down by more than a third next week compared to 2024. He said the port’s planning tool shows a 35 percent decline next week, noting that approximately 45 percent of the port’s volume is made up of shipments from China.
Today, the Port of Los Angeles is reporting that there are only six containerships on berth, down from 14 last Friday, April 25. While the report shows 44 vessels inbound between Asia but still outside the 40 nautical mile zone, the port also reflects that 20 sailings have been blanked by the carriers during May. That represents 253,500 TEU of capacity that has been canceled for the month while an additional 10 sailings (117,500 TEU of capacity) have already been canceled for June.
Seroka told CNBC that the cancellations in May represent approximately a quarter of the usual number of ships arriving in the port. It will have direct repercussions on the jobs of the longshoremen and others working in the port as well as the trucking and warehousing industries.
Impact on U.S. Economy and Consumers
The concerns are starting to ripple across the U.S. economy. The Conference Board reported today that consumer confidence plunged to a five-year low, reaching levels not seen since the pandemic in May 2020. The report shows that the consumer confidence index fell 7.9 points in April to 86 with growing concerns over the job market and a looming recession.
Seroka forecasted that consumers would begin to see the impact of the slowdown in imports with reduced choices on the shelves of retail stores. Other economists have been more dire in their outlook, suggesting that Americans would soon begin to experience shortages and empty shelves rivaling the peak of the pandemic.
Retailers and Inventory
Retailers appeared to rush shipments in March in an effort to build inventory. The Port of Los Angeles reported that March volumes were up nearly 5 percent for the month. During the first quarter, it said volumes were up better than 5 percent. This led Seroka to forecast on CNBC today that retailers have about five to seven weeks of full inventory left on their shelves.
The March trade deficit report from the Commerce Department supported the position that retailers rushed imports through the ports last month. The U.S. trade deficit for goods widened to a record high ($162 billion) in March with imports in total soaring to over $340 billion. The goods trade gap increased to just under 10 percent or an increase of more than $16 billion creating the imbalance despite a more than $2 billion increase in exports.
Seroka forecasted that the volumes coming out of China, except for a few commodities, would remain “light at best” until “some accord or framework can be reached with China.”