Port of Los Angeles estimates 25% of its cargo could be affected by tariffs

Dive Brief:

The largest U.S. port could see a quarter of its cargo affected by upcoming tariffs, Gene Seroka, executive director of the Port of Los Angeles said in an interview with CNBC.
Still, the potential impact does not detract from the otherwise strong growth seen by the port. "We have seen not only the normal peak season rush for back to school goods, fall fashion and year-end holidays ... (but also) the cargo moving in with purchase orders advanced to avoid potential tariffs," Seroka said.
"For the next couple of months we see the volumes remaining strong," he added. The port handled 833,000 TEUs in July, a record number for the month, which was also the fourth-strongest single-month figure in the port's history, Port Technology reports.

Dive Insight:

Seroka's comments validate a few theories on how ports are feeling the effects of tariffs: volumes are shifting earlier as shippers avoid tariffs, but an otherwise strong economy is still keeping the supply chain links busy.

Despite the expectation that 25% of the port's products could be affected, Seroka remains optimistic about volumes going forward. After all, the tax on imports affects all U.S. ports, not just Los Angeles, so shippers have little reason to change transportation routes if they have to import products anyway.

In other words, trade wars are having an effect on volumes, but not nearly enough to overpower economic growth.

Drewry Shipping Consultants on Friday released an analysis of the global trade figures it collects through its Global Container Port Throughput Index, which samples data from 220 ports worldwide that represent 75% of all trade, and described a similar story.

"After witnessing an all-time high in May 2018, the global container port throughput index declined to 128 points in June 2018 with 2% monthly reduction, possibly a consequence of trade war jitters," the firm wrote. "However on an annual comparison, the index is 3.5% higher than the June 2017 level of 123.8 points."

The monthly reduction was a worldwide phenomenon. "All regions witnessed a monthly decline in June 2018 vs May. North America was the least affected region with a fall of less than one point, likely boosted by shippers trying to beat tariff imposition deadlines," the firm wrote. China, meanwhile, saw monthly volumes fall 1.6% in June 2018.

On an annual basis, however, North America saw a growth of 5.4% — the highest of all regions — whereas China saw 2.5% growth in throughput compared to last year.