Lunar New Year and coronavirus take toll on February POLA and POLB volumes

The ongoing impact of the coronavirus on logistics and supply chain operations was evident in February volume numbers issued this week by the Port of Los Angeles (POLA) and the Port of Long Beach (POLB).

Total February POLA volume—at 544,037 TEU (Twenty-Foot Equivalent Units)—saw a 22.9% annual decline. Imports—at 270,025 TEU—fell 22.5%, and exports—at 134,468 TEU—dipped 5.4%. Empty containers saw a 35% decrease to 139,544 TEU. In addition to the coronavirus, POLA officials said these numbers were also impacted by the Asian Lunar New Year holiday, which sees myriad factory shutdowns for multiple weeks and were closed for a longer period, due to the coronavirus situation.

On a year-to-date basis through February, POLA volume—at 1,350,181 TEU—are off 13% compared to the same period in 2019.

“虽然货运量非常重要,coronavirus is first and foremost a public health crisis that needs to be brought under control with the collaboration of governments and medical experts from around the world,” said Port of Los Angeles Executive Director Gene Seroka in a statement. “We are more interconnected than ever with our global partners so it’s no surprise that Trans-Pacific maritime trade has been significantly impacted. As factory production in China remains at low levels, we expect soft volumes in March. Looking ahead to anticipated manufacturing improvements, we will need to return empty containers to Asia and push lingering U.S. export boxes out swiftly. We’re actively working with our supply chain partners to be prepared for a cargo surge once production levels ramp up.”

At the Port of Long Beach, total February volume—at 538,428 TEU—saw a 9.8% annual decline. Imports—at 248,952 TEU—fell 17.9%, and exports—125,559 TEU—were up 19.3%. Empty containers were down 12.8% coming in at 162,277 TEU. And on a year-to-date basis through February, POLB volume is down 7.1% at 1,165,257 TEU.

POLB officials observed that even though a Phase 1 preliminary trade agreement was inked by the United States and China in January, there is roughly $370 million in Chinese goods still under the increased tariffs. What’s more, it pointed out that the coronavirus has caused further damage to the supply chain, in the form of an uptick in cancelled, or “blank,” sailings and a reduction in cargo moving through the port.

“扩展工厂倒闭和放缓of goods movement in China and other Asian countries in February due to Lunar New Year and COVID-19, we are seeing shipping lines needing to cancel some sailings,” said Mario Cordero, Executive Director of the Port of Long Beach, in a statement. “Once the virus is contained, we may see a surge of cargo, and our terminals, labor and supply chain will be ready to handle it.”

The most recent edition of the Port Tracker report by the National Retail Federation (NRF) and maritime consultancy Hackett Associates highlighted the current coronavirus situation, as it relates to U.S.-bound import activity.

A key theme of the report focused on given how the coronavirus continues to spread, the subsequent impact on global shipping operations is expected to be longer, larger, and more lasting than was first thought, coupled with factory shutdowns and travel restrictions in China affecting production.

As noted in the previous edition of Port Tracker, coronavirus continues to raise myriad concerns for global shipping, which were outlined by NRF Vice President for Supply Chain and Customs Policy Jonathan Gold.

“There are still a lot of unknowns to fully determine the impact of the coronavirus on the supply chain,” Gold said. “As factories in China continue to come back online, products are now flowing again. But there are still issues affecting cargo movement, including the availability of truck drivers to move cargo to Chinese ports. Retailers are working with both their suppliers and transportation providers to find paths forward to minimize disruption.”

These factors were supported in a separate survey of NRF members, which showed that 40% of respondents indicated they are seeing coronavirus-related issues to the supply chains, with 26% expecting to see disruptions while it continues to be monitored.

KeyBanc Capital Markets analyst Todd Fowler wrote in a research note that it is likely March may see similar volume declines as February, with first quarter volumes for POLA and POLB potentially seeing declines in the mid-teens.

“[T]he environment undoubtedly remains fluid with downside risk contingent on domestic risk contingent on domestic economic activity,” he wrote. “Overall, we expect lower import activity likely to have negative implications for intermodal and truck volumes near term.”