The US/China trade war has caused “significant disruption” in the supply chain – add the Covid-19 crisis and “we went from uncertainty to significant disruption to a point of chaos in the supply chain,” said Port of Long Beach executive director Mario Cordero
Port of Long Beach is expecting to see a Q1 loss of around 7% due to the coronavirus and US/China trade war.
The port moved 7.6M TEU in 2019 – the second-highest total in its history after its volumes for 2018, despite the challenges of the US/China trade war.
But since the start of this year, the impact of the trade war plus the coronavirus pandemic has had a negative impact on volumes. January year-on-year container volumes dropped by 4.8% and February volumes slumped by 9.8% as the coronavirus impact started to take effect. For Q1, the port forecasts a loss of 6-7%.
Port of Long Beach executive director Mario Cordero told Container Shipping & Trade “It has been challenging because of the trade war that caused significant disruption in the supply chain. Add to that the Covid-19 crisis and we went from uncertainty to significant disruption to a point of chaos in the supply chain. It [Covid-19] has been a crisis of historic proportions, it is a global challenge.”
He said the San Pedro Bay complex, which includes both the Port of Long Beach and Port of Los Angeles, had a combined total of 60 blank sailings due to the Covid-19 crisis.
“Usually our January and February numbers are low because of the Chinese new year but because of Covid-19, the low numbers and low volumes have doubled. Ordinarily, in the Lunar New Year period, we expect a 5% reduction in volumes but because of Covid-19, the numbers have doubled to 10%. The Lunar New Year closure of factories in China averages two weeks but some of these factories were down three or four weeks due to Covid-19, so suffice to say this resulted in a total stoppage in the supply chain. But China has now revamped and so we are looking forward to seeing how we come back in terms of some of these import volumes.”
He pointed out the “severe impact” of blank sailings: when a vessel does not arrive in a string that loss is around US$300,000 a vessel, but if you multiply that by 10, that is easily US$3M.”
Mr Cordero stressed “The port is open, the cargo is moving and we continue with our plan of action in making sure we emphasise efficiency and reliability in cargo movement at the Port of Long Beach, and will continue with our capital improvement projects – there has been no step back from that plan of action.”
Phase one of the US/China trade war deal was completed on 15 December 2019. Mr Cordero commented “That gave some light at the end of the tunnel, particularly for exports, we were looking forward to some volume increases and an increase of exports as we entered 2020 but the Covid-19 crisis stopped that.” But he pointed out that while the port had an overall loss of 9.8% in volumes, export volumes increased 19% in February. “So I think if there is a positive in what we have seen, the exports have increased, but we are taking a month-by-month analysis as to how it goes with the trade war,” said Mr Cordero.
“We all have to keep in mind that even though the phase 1 agreement is a positive step, there is still approximately US$370Bn of Chinese products still impacted by tariffs, so there is a long way to go before we can measure success by trade war developments.”