Asymmetries and Bromides on the Docks

By Jock O’Connell

In the maritime trade arena, there's a noticeable obsession with containerized imports. Recent discussions among North American port experts have increasingly centered on the shift of containers from U.S. West Coast ports to those on the East Coast, Gulf Coast, and in British Columbia. This has almost become a competitive sport, with enthusiasts closely monitoring and reporting on these shifts.

However, containerized exports often receive less attention, except for specific cases like the Port of Savannah, which proudly claims it ships more outbound loaded TEUs than the Port of New York/New Jersey. Even the Port of Oakland, which used to boast about exporting more loaded containers than it imported, can no longer make that claim.

Recently, there’s been heightened scrutiny on containerized exports due to their relatively low volumes. Gene Seroka, the head of the Port of Los Angeles, has expressed concern over the significant imbalance between containerized imports and exports through his port. In August, the Port of LA handled 516,286 loaded inbound TEUs compared to only 131,429 loaded outbound TEUs, creating a nearly 4-to-1 ratio. The imbalance persisted in September, although both inbound and outbound loads decreased.

This imbalance isn’t new at the Port of LA but has been exacerbated by shippers favoring the Port of LA and Port of Long Beach despite the Four Corners Strategy. Historically, the Port of LA’s imbalance has been significant, as shown in Exhibit A, and the Port of Long Beach has also experienced similar disparities, as illustrated in Exhibit B.

Interestingly, while the Port of LA’s outbound traffic is dominated by empty containers, Exhibit C highlights that these empties make up a significant portion of the port’s outbound container traffic. For instance, in August, the port shipped a record 313,379 empty TEUs, the highest in its history. September saw a drop in empty TEUs but still represented a significant portion of outbound traffic.

Exhibit D shows that when accounting for both loaded and empty containers, the ratio of inbound to outbound containers isn’t as skewed as the extreme 4-to-1 or 5-to-1 ratios suggest. Since 2000, inbound TEUs at the Port of LA have consistently exceeded outbound TEUs by an average of 13.1%. The disparity in August was 16.2%, and in September, it grew to 17.1%.

The imbalance is even more pronounced in terms of dollar value, as demonstrated in Exhibit E. In 2019, containerized imports at the Ports of Los Angeles and Long Beach totaled $274.06 billion, while exports amounted to $57.44 billion, showing a 377% disparity. This year, the gap has been slightly less, at 372%.

The persistent imbalance between containerized imports and exports reflects a broader issue. If you were born in the last year the U.S. had a merchandise trade surplus, you'd be 45 years old now. The current imbalance isn’t likely to be resolved quickly, whether through the resolution of trade conflicts with China or a resurgence in American manufacturing competitiveness. Exhibit F shows that growth in the real value of U.S. merchandise exports since the Great Recession has been modest.

Although there are calls for a national export strategy to address this issue, it remains unclear which federal government—whether focused on infrastructure, healthcare, or housing—would take on this task. The idea of a national export strategy sounds appealing but is it a practical solution?

Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.