Cargo numbers continued to push higher at the Port of Los Angeles in February \u2014 but it came with some caution that the pace could slow by midyear.
\n
\n\u201cAt some point, we will see a softening of the numbers,\u201d Executive Director Gene Seroka said in his monthly virtual news conference on Wednesday, March 19, adding that it is possible to see a 10% decline in volume in the second half of 2025.<\/p>\n
While it is still early in the year, consumer confidence and spending are expected to see a potential downturn, a point made in Seroka\u2019s discussion with this month\u2019s guest, Nela Richardson, chief economist at Automatic Data Processing Research, which analyzes the labor market and employee performance.
\n\u201cThere are a lot of things happening at the same time,\u201d Richardson said, highlighting Wednesday\u2019s Federal Reserve meeting about interest rates that were kept unchanged. \u201cThere are a lot of moving parts here and all of them are going to have specific and collective impacts.\u201d<\/p>\n
February cargo numbers \u2014 with 801,398 units flowing through the port \u2014 was the \u201csecond busiest February on record\u201d and 2.5% more than the same month in 2024, Seroka said.
\nBut, he said, shippers and retailers front-loading cargo continued to influence those high numbers as they try to get cargo sent before tariffs set in.
\n\u201cFor 17 of the last 19 months,\u201d Seroka said, \u201cthe Port of Los Angeles has experienced year-over-year cargo growth, all without ship delays or back-ups on our docks.\u201d<\/p>\n
Retailers and manufacturers \u201chave been importing their products through Los Angeles earlier than usual as a hedge against tariffs,\u201d Seroka said. \u201cGiven the substantial inventory already here, and the uncertainty of tariffs, it\u2019s possible we could see a 10% volume decline in the second half of the year.\u201d
\nThere was little else being discussed at the recent TPM Conference for the shipping industry in Long Beach, Seroka said.
\n\u201cThe overall mood of the 4,200 attending\u201d was concentrated on concerns over the coming tariffs, Seroka said.<\/p>\n
\u201cMany of us were reacting in real time to the rapidly changing\u201d news and the developments coming out of Washington about the tariffs, he said.
\n\u201cMany of the executives were spending time (talking about) tariff \u2018what-if\u2019 scenarios,\u201d Seroka added. \u201cThis has profound implications for the private sector across the board.\u201d
\nConsumer spending, meanwhile, looks to be slowing in 2025, though it is still early, Richardson said.
\n\u201cWe saw a big slowdown in January,\u201d she said, \u201cbut the good news is by February, we\u2019d recovered some of that.\u201d<\/p>\n
Large items such as furniture and luxury items could begin to see spending retreats sooner if the economy slows, Seroka said.
\nIn the \u201cbig picture,\u201d Richardson said, \u201cwe are in a really solid time. But under the hood of that car, there are a number of bubbles that economists are concerned about.\u201d
\nThe labor market, she said, is exceptionally stable with layoffs at historic lows.
\n\u201cWorkers are staying at companies longer and companies are keeping employees longer,\u201d she said. \u201cWages are elevated but starting to come down.\u201d<\/p>\n
The workforce is also aging, Richardson said, and the growth of artificial intelligence could impact the workplace in coming years and decades.
\n\u201cWe have 10 million workers every day reaching retirement age,\u201d she said, adding that will lead to a transformation in the labor market.
\nInflation also continues to be a factor, she added.
\n\u201cWe already have a fatigued consumer who continues to spend,\u201d Richardson said, \u201cbut we\u2019ve seen some fracturing in recent retail numbers and expectations.\u201d<\/p>\n
Seroka also noted differences in tariffs this time around compared to those imposed during the first Trump administration.
\n\u201cCompared to the first time,\u201d he said, \u201ctariffs (then) were more narrowly focused, there were specific lists.\u201d
\nDuring that period, around March 2018, Seroka said, \u201cwe saw peak runs of cargo coming in and then pretty severe drop-offs afterward.\u201d
\n\u201cWe saw a 16% drop in our business at the Port of Los Angeles (in 2019),\u201d he added. \u201cIt just kind of gummed up the works of the supply chain.\u201d
\nThe tariffs being proposed now, Seroka said, are wider \u2014 such as covering all goods imported from China.<\/p>\n
A special concern, he said, is how tariffs will impact the rebuilding effort for Southern California\u2019s fire areas.
\n\u201cTo build these houses, we need softwood lumber, aluminum, and steel from Canada, appliances from Mexico,\u201d Seroka said, \u201cand all of those prices are going up.\u201d
\nPolicy makers need to be pressed to consider the rebuilding efforts, he said.
\nTariffs will also likely prompt some shift in items that typically come from China to other countries in Asia, Seroka said.<\/p>\n
In conclusion, while the Port of Los Angeles has seen an increase in cargo numbers, the uncertainty surrounding new tariffs and their potential impact on consumer spending and the labor market could lead to a decline in volume in the second half of 2025. It is essential for policymakers to consider the effects of tariffs on various industries, including the rebuilding efforts in Southern California.<\/p>\n
Q: What is the current state of cargo numbers at the Port of Los Angeles?
\nA: Cargo numbers have continued to push higher, with February being the second busiest February on record, but there is some caution that the pace could slow by midyear.
\nQ: What is the main concern for the shipping industry regarding tariffs?
\nA: The main concern is the uncertainty surrounding the new tariffs and their potential impact on consumer spending and the labor market.
\nQ: How do the current tariffs differ from those imposed during the first Trump administration?
\nA: The current tariffs are wider, covering all goods imported from China, compared to the more narrowly focused tariffs imposed during the first Trump administration.
\nQ: What is the potential impact of tariffs on the rebuilding effort in Southern California?
\nA: Tariffs could lead to an increase in prices for materials needed for rebuilding, such as softwood lumber, aluminum, and steel from Canada, and appliances from Mexico.
\nQ: What is the outlook for consumer spending in 2025?
\nA: Consumer spending looks to be slowing in 2025, though it is still early, with a big slowdown in January but some recovery in February.<\/p>\n","protected":false},"excerpt":{"rendered":"
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