The volume-driven congestion that gripped Los Angeles-Long Beach this winter is over, but work remains to be done to bring container dwell times back down to their three-year average.
Container dwell times averaged 2.68 days in March, down from 4.32 days in January and 3.2 days in February, but were still higher than the 2.14-day average seen over the past three years. “While the dwell time numbers are decreasing, 8.7 percent of containers remained at a terminal for five days, which is too high for an efficient operation,” said Jessica Alvarenga, manager of government affairs at the Pacific Merchant Shipping Association (PMSA), which publishes container dwell times each month at the largest US port complex.
Los Angeles-Long Beach is a significant link in US import supply chains, and congestion in the gateway translates to delays in the delivery of containers to population centers throughout the eastern half of the country. Congestion in the Southern California port complex peaked in January as importers sought to beat Trump administration tariff deadlines, but it dissipated in February along with declining US imports from Asia. “The two San Pedro Bay ports saw their combined share of containerized import tonnage arriving at mainland US seaports drop from 34.6 percent in January to 27.5 percent in February,” the PMSA stated.
Retailers and manufacturers front-loaded shipments to avoid 10 percent tariffs on imports from China in September, rising to 25 percent on Jan. 1. The 25 percent tariffs did not take effect and are still in flux as US-China negotiations continue, but the front-loading of spring merchandise in late 2018 is expected to result in low single-digit growth in imports in the first half of 2019.
The slower growth in volume should prevent a return of congestion in Los Angeles-Long Beach in the coming months as carriers cancel sailings to keep rates afloat, rather than adding extra-loader vessels as they did in late 2018 and early 2019. Carriers deployed about 34 extra-loader vessels in November-December. In order to better match capacity with demand and prevent ocean rates from tumbling, carriers this spring have blanked at least 35 sailings from February into April.
Truck turn times at marine terminals, which had escalated to 90 minutes in December and 98 minutes in January, fell back to 90 minutes in February and they continue to improve, according to the Harbor Trucking Association (HTA), which publishes monthly turn times in Los Angeles-Long Beach. Turn times in March averaged 83 minutes.
The drop in container dwell times at the marine terminals below three days highlighted in the PMSA release, and improving truck turn times noted by the HTA, should push marine terminal utilization rates lower, which will further contribute to improved productivity. When the average container dwell time exceeds three days, congestion and delays increase rapidly. Alan McCorkle, vice president of Yusen Terminals in Los Angeles, told the JOC’s TPM conference in Long Beach in March that terminal utilization in January-February exceeded 100 percent. Port analysts say service levels begin to deteriorate when utilization exceeds 80 percent.
The congestion problems in Los Angeles-Long Beach were due in large part to unprecedented imports in the final months of 2018 and in January 2019. US containerized imports from Asia declined 0.5 percent in the first quarter, after rising 15.5 percent in the fourth quarter of 2018, according to PIERS, a JOC.com sister product within IHS Markit.
PMSA data show that the Los Angeles-Long Beach share of US imports from East Asia in January was 51.4 percent, compared with 46.6 percent in January 2018. The Southern California share of US imports from Asia in February dropped eight percentage points to 43.3 percent. “In terms of sheer volume, the slowdown was most evident at the ports of Los Angeles and Long Beach, where February saw combined import loads tumble by 10.2 percent,” PMSA stated.
PMSA has been tracking container dwell times in Los Angeles-Long Beach since May 2016. The average dwell time before the tariffs changed shipping patterns last autumn was 2.14 days, with 5.5 percent of containers remaining five days or longer on the docks. “Those are the numbers we hope to get back to,” Alvarenga said.