How The Port Of Los Angeles Is Coming Back To Life After The Pandemic
ARI SHAPIRO, HOST:
The Port of Los Angeles is the nation's busiest. Last year, more than 9 million container units moved through there, packed with auto parts, clothes, furniture, electronics and more. When I talked to the port's executive director Gene Seroka in early March, he told me business had already slowed way down.
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GENE SEROKA: We've had 41 vessels canceled thus far from middle February through April 1. That represents about 25% of our normal ship calls.
SHAPIRO: After that, the U.S. economy went into near total lockdown. And now as some businesses start to open back up, we've got Gene Seroka back on the line from the Port of Los Angeles to tell us how things are looking today.
Good to talk to you again.
SEROKA: You as well, Ari. Thank you.
SHAPIRO: Last time you were on the program, I asked you to look out your fifth-floor window and tell us what you saw. It wasn't exactly a ghost town, but it was a lot quieter. What does it look like today?
SEROKA: A little bit more like normal, but volume is still down year to date by about 20%. We have approximately 10 ships at berth moving around, plus - that's on the container side, and then plus a variety of others. But realistically speaking, we continue to move along at about 20% downward trajectory compared to last year.
SHAPIRO: You know, a lot of Asian markets that manufacture goods for the U.S. came back online over the last few months while the U.S. economy was in lockdown. So when the Asian factories turned back to life but U.S. stores are closed, did the U.S. have the capacity to take what was being produced overseas?
SEROKA: Yeah, by and large, yes. We had gone through several cycles, as you and I have spoken about before, concerning the tariffs and the milestones that were associated, which created importers having the need to expedite their cargo to avoid those tariff milestones.
SHAPIRO: Get stuff to the U.S. before the tariffs set in, yeah.
SEROKA: That's right. So we built up a lot of inventory at our distribution centers and warehouses. And while we were at an uneven state with China facing its COVID exercise in the early part of the year and then ours later, we were able to work down some of the inventory in those DCs and warehouses. So the cargo fluidity through this port complex has been very good. We've got room to grow. The truck and rail connectors, the work on the ships are all happening flawlessly today...
SHAPIRO: And so as of this...
SEROKA: ...Just not enough cargo.
SHAPIRO: Yeah. As of this moment, are people coming back on the job who had been furloughed? Like, what's the current state of play?
SEROKA: We've got a couple of looks at this. Number one, our longshore workforce and its shift work activity is down about 19% year over year and 20% compared to the three-year average, so trending in line with the declination of cargo. What we're also seeing is less truckers and less cargo to haul. In addition to that, the DC and warehouse workers are being called in on less frequency or lower frequency than normal as well. So all in all, we're operating at about 80% of normal. And with 40 million Americans out of work today, I think we're in a good place as the American economy attempts to reemerge.
SHAPIRO: And did it feel for the last few months like everything was down 20% across the board, or were some things coming in as normal and other things not at all?
SEROKA: Well, some things we totally whiffed on completely. And you look at fast fashion or spring fashion where we bypassed that completely, the spring holidays. And now back-to-school seems pretty elusive, too, without a concrete plan as to what either in-classroom learning or distance learning will look like. We have some signals that say folks and families are just buying the necessities to have kids reenter the classroom setting but not necessarily all the other works that go along with that - new outfits for the kids, new sneakers, et cetera. We're also in danger now of missing what we would call a traditional peak season. Retailers have postponed, canceled or otherwise rearranged orders just based on the plummeting demand that we witnessed over the last several months here in the United States.
SHAPIRO: All right, interesting. Gene Seroka is executive director of the Port of Los Angeles.
We appreciate your talking with us today. Thank you.
SEROKA: Thank you, Ari.
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