2015 POLA and POLB volumes are decent despite challenging start to the year

Despite the myriad challenges stemming from the West Coast port labor dispute between the Pacific Maritime Association and the International Longshore & Warehouse Union earlier this year, full-year 2015 volumes for the Port of Los Angeles (POLA) and the Port of Long Beach (POLB) were solid.

POLA and POLB are the two largest North American ports, and they collectively account for more than 40 percent of U.S. imports. As previously reported, West coast port volumes, especially in first half of the year, had been uneven, as ports had to work through the backlog caused by the nine-month West Coast port labor dispute between the PMA and ILWU, which reached a resolution in the form of a new contract agreement that was reached earlier this year.

2015 POLA volume came in at 8,160,457 TEU (Twenty-Foot Equivalent Units), which was down 2.1 percent compared to 2014 but still topped the 8-million TEU mark for the third time in the port’s history. Imports in 2015, which are primarily comprised of consumer goods, were down 2.6 percent at 4,159,461.45 (TEU), and exports at 1,656,677 TEU were down 14.3 percent. Empties at 120,168.05 were down 20 percent.

“I’m pleased that the Port of Los Angeles has surpassed the 8-million TEU threshold for the fifth time in our history,” said Port of Los Angeles Executive Director Gene Seroka. “Despite the soft start to the year, our terminals, labor force and supply chain stakeholders rebounded strongly. With bigger ships and the ongoing work to increase supply chain efficiencies, we look forward to building on this momentum in 2016.”

For the month of December, POLA imports were down 4.9 percent annually at 626,276 TEU, and exports dropped 13.7 percent to 131,239 TEU. Port officials said December volumes were down because a cargo terminal system was offline for multiple weeks in December so new software could be installed.

POLA Director of Media Relations Phillip Sanfield said that POLA is forecasting growth in the low single digits for 2016, adding that the port has started the year strong with the two largest ships to call North America: The Maersk Edmonton and the CMA CGM Benjamin Franklin. Both ships were handled successfully by APM Terminals at Berth 400.

At POLB, full-year 2015 volumes rose 5.4 percent annually, coming in at 7,192,066 TEU. Imports were up 3.1 percent at 3,625,263, and exports fell 4.9 percent to 1,525,560 TEU. Empties saw a 20.2 percent gain to 2,041,243 TEU. Port officials said that these annual numbers reflected how the strong U.S. dollar continues to favor imports and discourage exports, and, in turn, sees more empties being sent overseas to be refilled with goods.

July and August stood out in 2015, with POLB hitting record cargo volumes in the third quarter, which it said was its highest-volume quarter ever at more than 2 million TEU.

“We’re gratified to see the business growth — we worked diligently over these past 12 months to recover from a very challenging start to the year, resulting in record volume and productivity gains and the strong and steady return of diverted cargo,” said Port of Long Beach CEO Jon Slangerup. “We credit terminal operators, labor, shipping lines, cargo owners and our local community with pulling together to turn things around.”

December POLA volumes were up 5.1 percent annually at 591,448 TEU. Imports at 296,002 TEU and exports at 126,118 TEU were up 7 percent and down 4.1 percent, respectively, with empties up 9.5 percent at 174,328 TEU.

In a research note, Todd Fowler, analyst at KeyBanc Capital Markets, wrote that these numbers reflect how import growth moderated in late 2015 following strength earlier in the year and elevated inventories.

“Looking ahead, January comparisons are particularly easy reflecting prior-year port congestion and labor disruptions, as well as timing of the Lunar New Year,” he wrote. “Excluding these items, we expect elevated inventories and more cautious economic outlooks to be headwinds for import activity in the near term, partially offset by a stronger U.S. dollar and potential consumer or housing tailwinds.”

And Hackett Associates Founder Ben Hackett wrote in the most recent edition of the Port Tracker report his firm produces with the National Retail Federation that inventory-to-sales ratios remain a concern going forward, adding that enough time has passed since the disruption on the West Coast that it can no longer be looked to for justifying high inventories.

And he added that recent manufacturing data has been sluggish, with the Institute of Supply Management’s reporting contraction in November and December, holiday retail sales numbers expected to come in lower than anticipated, and GDP remaining under 3 percent.