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March 10, 2020 4:00 PM, EDT

Ports Post Volume Declines Over Coronavirus Fears

Trucks at the Port of Los AngelesTrucks await entry at the Port of Los Angeles. (Patrick T. Fallon/Bloomberg News)

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Newly released figures from some of the nation’s major ports show cargo volumes are slumping as they struggle to recover from the U.S.-China trade war and now the steep downturn in factory output from China in the aftermath of the coronavirus outbreak, which began there earlier this year.

“Overall, I think we’re in a bit of trouble with the supply chain disruptions and the fear that is freezing up the decision making in some companies,” Paul Bingham, a transportation economist with IHS Markit, told Transport Topics.

The impact of the disruptions is now being felt at ports on both coasts.

The Port of Los Angeles, the nation’s busiest, reported March 10 that container volume for February was down nearly 23% as 544,037 industry-standard 20-foot equivalent units were processed compared with 705,306 TEUs in 2019.

RELATED: Economic Concern Spreads in US Along With Coronavirus

Gene Seroka

Seroka

“While cargo volumes are important, the coronavirus is first and foremost a public health crisis that needs to be brought under control with the collaboration of governments and medical experts from around the world,” Port of Los Angeles Executive Director Gene Seroka said. “We are more interconnected than ever with our global partners, so it’s no surprise that transpacific maritime trade has been significantly impacted.”

Los Angeles’ neighbor, the Port of Long Beach, saw a 9.7% year-over-year drop, reporting it processed 538,428 TEUs in February compared with 596,616 in 2019.

“With the extended factory closures and slowdown of goods movement in China and other Asian countries in February due to Lunar New Year and COVID-19, we are seeing shipping lines needing to cancel some sailings,” Port of Long Beach Executive Director Mario Cordero said.

Cordero

Cordero and Seroka believe port volumes could increase later in the year.

“Once the virus is contained, we may see a surge of cargo, and our terminals, labor and supply chain will be ready to handle it,” Cordero said.

RELATED: Most Ports See Container Volumes Decline in January

In what some are saying was a display of confidence that the worst of the health crisis is over, Chinese leader Xi Jinping on March 10 toured Wuhan, the city at the center of the global pandemic, for the first time since the outbreak began.

“As factory production in China remains at low levels, we expect soft volumes in March. Looking ahead to anticipated manufacturing improvements, we will need to return empty containers to Asia and push lingering U.S. export boxes out swiftly,” Seroka said. “We’re actively working with our supply chain partners to be prepared for a cargo surge once production levels ramp up.”

The Port of Oakland realized a 2.9% drop in TEU cargo in February, processing 180,226 containers compared with 185,685 last year.

While much of the attention is focused on the coronavirus and its potential impact, the U.S. still has in place an estimated $370 billion in tariffs on imported Chinese products, even as the two nations have signed a “phase one” trade agreement.

On the East Coast, as a result of decreased shipping volume, the Port of Baltimore announced it is reducing its days of operation slightly in March.

“With current declines in international container volumes due to the coronavirus, Ports America Chesapeake, the company that operates the Seagirt Marine Terminal at the Port of Baltimore, closed on Thursday, March 5, and will close on Tuesday, March 17, which is held as an optional labor holiday depending on business,” the port said in a statement to Transport Topics.

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The port, which measures cargo in 20- and 40-foot containers, also reported March 11 its February container numbers are down 10%, to 46,045 compared with 51,226 a year ago.

The Port of Virginia reported an 8.9% year-over-year decline in February, processing 207,816 TEUs compared with 228,151.

The port’s CEO said the tariffs and concerns about the coronavirus are driving the numbers down.

“We are actively watching the situation and are in constant contact with the ocean carriers and cargo owners to get a better understanding of what they think the recovery is going to look like,” John Reinhart said. “The industry is facing some significant challenges, and while this situation is temporary, it is having a measurable, negative impact on our business, and we are responding accordingly.”

Several major ports on both coasts have yet to report February figures.

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