Port of Long Beach ‘Recapturing Market Share’ Amid East Coast Port Negotiations

As the threat of a dockworker strike lingers across 36 ports on the East and Gulf Coasts, the Port of Long Beach is bringing market share back to the coastal gateway.

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The San Pedro Bay port achieved its busiest June on record, with the hub attributing the traffic to a combination of factors, including “vibrant” consumer spending, potential tariff increases and the ongoing union labor contract negotiations .

On June 25, some 160 U.S. trade organizations sent a letter to President Joe Biden urging his administration to work with the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMX) to resume their contract negotiations. In that letter, the shippers observed a larger trend: “We are starting to see a shift back to West Coast gateways, where a long-term contract is in place, especially as we enter the busy peak shipping season.”

“We are recapturing market share and consumer spending is driving cargo to our docks as we head into the peak shipping season,” echoed Port of Long Beach CEO Mario Cordero in a statement. “I see modest growth for the second half of 2024 as we strengthen our competitiveness and continue to invest in our rail infrastructure projects that will maximize cargo velocity efficiently and sustainably for decades to come.”

Inbound cargo volume drove much of the added traffic to the Port of Long Beach, with imports at the gateway increasing 53 percent to 419,698 20-foot equivalent units (TEUs), while exports rose 4 percent to 98,300 TEUs. Empty containers moving through the Port increased 42.1 percent to 324,448 TEUs.

Overall, there are 842,446 TEUs that flowed through the Port of Long Beach in June, a 41.1-percent increase over the year prior.

“Our waterfront workforce and terminal operators are delivering top-notch customer service by promptly processing a hefty increase in containers during the very busy summer months,” said Bobby Olvera Jr., president of the Long Beach Harbor Commission. “We are focusing on our efforts to keep cargo flowing smoothly and secure our position as the premier gateway for trans-Pacific trade.”

While there had been a clear trending decline in total TEUs and vessels entering the Port of Long Beach since the start of the Covid-19 pandemic, data from Project44 further indicates that the strike threat could be starting a reversal. For example, the 66 ships inbound in the port as of June 1 is up from the six-year nadir of 54 vessels as of Feb. 1.

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Ocean freight rates between the coasts appear to have been slightly impacted due to the cargo shifts thus far, but not at an outsized degree. In general, rates throughout 2024 continued to escalate amid the ongoing disruption in the Red Sea as well as the ensuing port congestion at major global gateways in the Asia Pacific and Mediterranean regions.

According to the Drewry World Container Index, spot freight rates for 40-foot containers on the Shanghai-to-Los Angeles trade lane have skyrocketed 123 percent since May 2 to $7,512 on average. Containers travelling from Shanghai to New York rose 114 percent to $9,387. If more cargo continues to be pushed west, added congestion could further create a pricing gap where rates into the California ports are more expensive.

The shift of cargo back to the West Coast mirrors the shift toward the East Coast ports in 2023, which occurred ahead of a strike threat out west. Last February, 60 percent of import shipments arrived on the East Coast, but that number increased to 68 percent just four months later as shippers got spooked out of moving goods to the West Coast ports, according to FourKites.

In 2023, the ports of Long Beach and Los Angeles handled approximately 29 percent of all containerized international waterborne trade in the U.S.

As more product moves through the Port of Long Beach and its sister port, the Port of Los Angeles, the West Coast gateways are receiving $112 million for construction upgrades and operations and maintenance activities.

Even with the strike concerns at play, U.S. ports on both coasts are seeing a rebound across the board , handling 2.02 million TEUs of inbound cargo in April, a 13.2 percent year-over-year increase overall last year, according to the Global Port Tracker.

The flurry of cargo across U.S. ports is likely due to the pulling forward of goods into the U.S. ahead of and during the August-to-October peak season as they aim to ensure sufficient inventories for the holiday season. Additionally, many shippers want to get out in front of increased tariffs on goods from China set to take effect next month.

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