We have read a few articles lately that indicate 2010 Los Angeles port traffic is up over 2009. For example, the below article written by the Los Angeles Times states, “Port traffic is up 21% to 369,389 containers compared with a year earlier.”
The question we want to pose is: “How can port traffic be increasing with unemployment?”
We are having a hard time understanding how rising unemployment is related to increased port traffic. We want to know where the inventory is headed as unemployment is at a record high and consumer confidence remains low.
We look forward to your comments and insight.
Article by the Los Angeles Times – 8-14-2010 Southern California’s twin ports enjoyed another burst of cargo traffic in July, but economists are concerned that the freight flurry won’t last as consumers take a vacation from spending and retailers trim orders to match reduced expectations.
July is usually the opening month of the busiest cargo shipping season of the year, when retailers begin to receive goods that they hope to sell during the end-of-the-year holidays. Import numbers tend to climb steadily through October, the month when cargo usually peaks at the ports of Los Angeles and Long Beach. But perhaps not this year.
“The traditional peak season may be melting away,” said Ben Hackett, founder of Hacker Associates, which monitors cargo volumes at the busiest seaports in North America on behalf of the National Retail Federation.
The good news is that international trade will finish the year far ahead of the numbers recorded last year, when global cargo container traffic fell for the first time in at least half a century, according to AXS Alphaliner, which tracks the maritime industry from its headquarters in Paris.
The bad news for the ports of Los Angeles and Long Beach — part of a supply-chain infrastructure that employs dockworkers, truck drivers, railroad employees, warehouse and distribution center staffs and logistics experts — the big bump in holiday-season cargo jobs may not come this year.
Consumers remain very cautious about the safety of their own jobs, and retailers are paying attention to those signals, experts said.
“Retailers are monitoring demand very closely and hoping to see increases in employment and other areas that will boost consumer confidence,” said Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation.
July was still one of the best months in many years for both ports. At Los Angeles, the nation’s busiest container port, imports were up 21% to 369,389 containers compared with a year earlier, and exports increased 5.9% to 146,369 containers. Overall traffic at Los Angeles rose 26.8% to 730,746 containers in July and 16.8% for the year to 4.4 million containers.
At Long Beach, second only to Los Angeles in cargo traffic, imports climbed 32.5% to 293,878 containers compared with the same month a year earlier and exports rose 16.4% to 126,177 containers. Overall traffic at the port was up 35.8% to 587,881 containers in July and up 22.3% for the year to 3.4 million containers.
At the port of Los Angeles, the harbor’s main shipping channel no longer looks like a place quiet enough for waterskiing, as the port’s executive director, Geraldine Knatz, observed last year.
“I see ships out there, so it’s not waterskiing time,” Knatz quipped. “There are still a lot of concerns about the fourth quarter and early next year, but we just had our second-best July ever after our second-best June ever.”
But some experts pointed out that some of the gains were a reflection of how hard the shipping industry was hit last year, when it lost as much as $24 billion. As trade dried up in 2009, cargo containers stacked up where they were last delivered. As trade picked up, shipping lines had to move record numbers of those empty containers back across the Pacific to factories in Asia.
“There have been container ships that have sailed with nothing but empty containers for that reason,” said Jock O’Connell, principle consultant at the Clark Street Group, an international economics consulting firm in Sacramento.
At Los Angeles, the number of empty containers moved in July was up 62% compared with a year earlier. In Long Beach, the number of empty containers shipped was up 63% compared with a year earlier.
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