The leader of the busiest U.S. seaport on Friday said February's cargo volume hit the lowest level since the start of the pandemic as inflation and economic upheaval hurt demand, and signaled that activity may not pick up until the second half of this year.
"This is a global phenomenon. We may not be at the height of the pandemic, but there are more container vessels sitting idle around the world today than at any time since it began," Port of Los Angeles Executive Director Gene Seroka said on Friday.
He and other ocean shipping experts say a turnaround won't come until retailers and other cargo owners clear clogged U.S. warehouses to make room for new shipments.
Executives at Walmart, the largest U.S. importer of containerized goods, say they have made progress clearing unsold goods. Nevertheless, they remain cautious about consumer spending as inflation gobbles up money otherwise spent on goods, and recession and other "unknowns" threaten.
Meanwhile, importers are selling products for pennies on the dollar to liquidators or offering steep discounts in customer email blasts. Still others have thrown up their hands.
Bobblehead maker Funko earlier this month said it was destroying $30 million to $36 million of toy products from its overstuffed distribution center in Arizona.
The Port of Los Angeles handled 331,811 20-foot (6-meter) equivalent units (TEU) of goods in February, a 36% year-over-year drop led by plummeting imports.
Seroka expects first-quarter volumes to be down roughly 33% from last year and about 20% below the five-year average before starting to improve in the third quarter.
"How much (improvement) remains to be seen," said Seroka, who added that ongoing West Coast port labor talks are also weighing on results.
(Reuters - Reporting by Lisa Baertlein; Editing by Sandra Maler)