ARE Los Angeles and Long Beach heading for another port congestion crisis?
Since the United States put tariffs on hold for a 90-day trade war truce with China on May 14, the market has expected a shipping surge driven by Chinese exports. Ocean carriers have re-instated suspended services, restarted vessels lying idle, and introduced new routes – revitalising transpacific lanes.
But how much capacity has actually returned to the US-bound trade?
Estimates vary. According to maritime consultancy eeSea, total capacity from Asia to North America will reach 2.4 million twenty-foot equivalent units (TEUs) in June – 400,000 TEUs more than May. That figure is projected to climb further in July to 2.8 million TEUs. The majority of this added capacity targets the US West Coast, particularly the ports of Los Angeles and Long Beach.
Data provider Sea-Intelligence reports similar trends. Its latest weekly update shows a 17 per cent year-on-year rise in Asia-US West Coast capacity in June, with a projected 19 per cent jump in July.
Meanwhile, East Coast capacity is growing more modestly – up only 7 per cent in June but expected to match the West Coast’s 19 per cent rise in July. These figures are based on carriers’ existing schedules, which remain subject to change.
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The big question is whether Los Angeles and Long Beach can handle this influx. Will the port congestion seen in the pandemic era re-appear?
Preliminary forecasts indicate that container volumes at both ports will begin rising in the second week of June, topping 100,000 TEUs a week. Volumes will continue climbing in the third week. While fourth-week data is not yet available, estimates suggest traffic will remain elevated. Many extra sailings are scheduled to arrive in late June and early July, suggesting persistently high throughput at least into mid-July.
Historically, both ports handled their highest Asian import volumes in 2021 during the Covid-19 pandemic – about 10 million TEUs for the year. The Port of Los Angeles alone processed a record 520,000 TEUs in May 2021, while the Port of Long Beach reached its single-month peak of 400,000 TEUs the same month.
Will the same influx appear again this time?
Industry opinion is divided. Senior executives at leading carriers and terminals suggest the tariff deferral may not trigger a pandemic-style shipping boom. While June volumes are likely to exceed May’s, early expectations may have overshot.
Much of the inventory that had been sitting in warehouses shipped out quickly after the May 14 tariff suspension. And even if buyers place new orders, lead times mean many shipments will not depart until late June or July.
Moreover, despite the suspension of a 125 per cent reciprocal tariff, the 30 per cent levy added this year – on top of 2018’s Section 301 duties – means US-China trade has not returned to normal. The truce may offer temporary relief, but it is unlikely to generate a prolonged surge.
Freight rates on transpacific routes have spiked in recent weeks. But does that signal true demand strength?
A key indicator is the balance between cargo booked under negotiated contract (NAC) rates versus freight-all-kinds spot rates.
At present, many freight forwarders are still able to secure lower-priced NAC slots — suggesting excess capacity remains. While sentiment may push prices upward temporarily, ultimate rate direction hinges on ship utilisation. If vessels sail full, rates will hold firm. If not, the rally will fade.
So, will there be port congestion?
A sudden and sustained spike in volume could strain operations. However, if elevated cargo volumes last only two to three weeks, the ports can manage. If imports climb more than 20 per cent above normal and stay high through July, congestion risks increase sharply.
The bottom line is that Los Angeles and Long Beach are entering a high-alert phase. If disruption comes, it will probably begin to show in late July. CAIXIN GLOBAL
Zhang Huafeng is the chief operating officer of Duke Shipping Agency
