CALIFORNIA’S PORT DOMINANCE IS SLIPPING
U.S. cargo industry shifts east as pandemic and other economic blows hurt state
California has suffered a series of economic blows this year, from torrential rains that inundated farmland to the failure of three regional banks. Now the state’s $2.8 trillion freight industry is under threat.
Southern California’s ports have grown up alongside China’s rise as a global trading power, moving almost 40 percent of containerized imports into the U.S. from Asia for the past two decades. But the pendulum is swinging east as the pandemic’s cargo crush pushed the Los Angeles and Long Beach complex close to the breaking point, allowing ports from New York-New Jersey to Houston to grow their market share.
A gradual shift was already under way. But it’s getting supercharged by simmering West Coast port labor talks, the near-shoring of factory production amid rising tensions with China, and U.S. population growth shifting to the Sun Belt states.
Some observers worry that the L.A.-Long Beach docks will struggle to stay the U.S.’s No. 1 ocean gateway over the long run.
“Now that pandemic cargo volumes have leveled off, the decline in market share has accelerated,” Pacific Merchant Shipping Association President John McLaurin said in his April trade report.
With negotiations between nearly 22,000 West Coast dockworkers and employers approaching the one-year mark this week, skittish logistics managers are taking action to avoid potential strikes and lockouts by realigning supply routes away from L.A.’s San Pedro Bay. Burned by pandemic-era bottlenecks, businesses are placing more of a premium on reliability.
Many recall contract talks in 2014 that dragged on for nine months and caused vessel backups and shortages for some consumer goods. Those talks finally ended when the U.S. government intervened, but it took most of 2015 for the shipping industry to return to normal.
This time around, operations at the 29 West Coast ports have been largely smooth since the Interna