Daily Breeze

LA, Long Beach ports uncertain about peak summer season during coronavirus

Port of Los Angeles Executive Director Gene Seroka said the downturns from both the trade war and COVID-19 will keep cargo volumes below normal for the rest of 2020 and into 2021.

It’s just about time for all those notebooks, fall outfits and other back-to-school necessities to start sailing into the Ports of Los Angeles and Long Beach.

Shortly after that, the traditional Thanksgiving-Christmas arrivals would normally begin to flow, bringing the peak season in port shipments during the summer.

But this year, all bets are off.

With the COVID-19 pandemic and the widespread economic shutdown, cargo is arriving — but on smaller ships and in overall lower volumes than previous years.

“As we began the (2020) year, I was talking about this being the year of uncertainty because of the trade war,” said Mario Cordero, executive director of the Port of Long Beach. “Now we’ve gotten to a point of ‘radical’ uncertainty.”

The second quarter, Cordero said, has seen 48 canceled sailings for both ports — 16 lost in Long Beach and 32 in Los Angeles.

Port of Los Angeles Executive Director Gene Seroka said the downturns from both the trade war and COVID-19 will keep cargo volumes below normal for the rest of 2020 and into 2021. Cordero said it will likely take two years to fully recover.

Already, significant shipping “seasons” are being missed.

“We’ve missed the entire spring fashion season,” Seroka said. “Stores are closed and the power of internet buying is not going to supplant people going into stores.”

Add to that the high unemployment rates, and consumer shopping has already taken a dive.

All of this could lead to longer-term effects on trade, experts said.

Nick Vyas, an expert in global trade at USC, said he thinks The disruption COVID-19 has caused could lead to a reshaping of the supply chain that breaks U.S. dependence on inexpensive Chinese goods and a China-centric trade habit.

“I call this a once-in-a-century event,” he said of the virus and its widespread impacts. “We’ve seen recessions, we’ve seen 9-11, we’ve seen other events such as SARS, MERS and Ebola. But we’ve seen nothing of the magnitude in disruption of the supply chain that COVID-19 has created.”

Both ports remain open and cargo is arriving. The massive volume the ports have seen for the last several years, however, has dwindled — at least for now.

“Business is moving and terminals are operating,” Cordero said. The Long Beach port’s finances, he said, are balanced.

Work continues on completing the Long Beach Container Terminal and the new Gerald Desmond replacement bridge, now tentatively set to open in late summer. Seroka said the L.A. Port also continues to move forward with projects already in the works.

But moving forward, the economy faces numerous challenges, with high unemployment and mortgage defaults, Vyas, director of the Center for Global Supply Chain Management and assistant professor at the USC Marshall School of Business, said in a Tuesday, April 28, telephone interview.

If the economy begins to reopen only to see the coronavirus return, more serious issues could emerge, he cautioned.

“God forbid we have a second wave,” Vyas said. “If we receive a (virus) spread in a second wave, forget about the (2020) ‘peak’ (shipping) season” in the summer.

“That would really create a double whammy,” he added, “and may be the last nail in the coffin for a lot of retail businesses.”

Falling consumer confidence — amid the continuing public health crisis, as well as recent news about potential uncertainty in the food supply chain — has already strained the economy, Vyas said.

Looking ahead, he said, a decoupling of what’s long been an over-reliance on trade with China could lead to more manufacturing in the U.S., Mexico, and even India and African countries.

On his blog, Vyas has written that calls for de-globalization could come in the wake of the COVID-19 crisis. But “decoupling” the global supply chains, which now dominates entire regions around the world, would be a better approach, he said.

“We all became very used to buying cheap goods (from China) and that became our lifestyle,” Vyas said this week. “It was like an addiction.”

Getting away from China-centric trade, he said, would create a more diversified and agile market for the U.S. in the long run.

If it shifts away from China, however, it could also mean less lucrative years ahead for the giant ports on America’s West Coast — which rely primarily on trade from Asia.

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