By Lisa Baertlein
LOS ANGELES (Reuters) – The head of the busiest U.S. port said on Friday that February’s cargo volume hit the lowest level since the start of the pandemic as inflation and economic turmoil 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 ships sitting idle around the world today than at any time since it began,” said Port of Los Angeles CEO Gene Seroka Friday. .
He and other 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 in clearing unsold goods. Nevertheless, they remain cautious about consumer spending as inflation swallows money otherwise spent on goods and recession and other “unknowns” loom.
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 said earlier this month it is destroying $30-36 million worth of toy products from its overcrowded distribution center in Arizona.
The Port of Los Angeles handled 331,811 20-foot (6 meter) equivalent units (TEU) of goods in February, down 36% year-on-year, led by falling imports.
Seroka expects first-quarter volume to fall about 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 negotiations are also weighing on the results.
(Reporting by Lisa Baertlein; Editing by Sandra Maler)