U.S. supply chains have a chance to normalize after retailers replenish inventories next quarter, even if peak summer demand arrives sooner than usual, according to Port of Los Angeles Executive Director Gene Seroka.
“Most retailers continue to tell me they’ll use quarter two to replenish inventory, get that safety stock at a more comfortable level,” Seroka said on Bloomberg Television on Wednesday. “Then we’ll have a chance if we hit these two marks properly to pivot into an earlier-than-normal peak season in early June or July.”
Seroka said he agrees with the chief executive of a major container line, A.P. Moller-Maersk A/S’s Soren Skou, who told Bloomberg TV in a separate interview, that ocean shipping should start returning to normal in the second half. Maersk, which handles almost one-fifth of the world’s container traffic, sees a 2%-4% expansion in the market this year, with a strong first half followed by an uncertain outlook after that.
At the Port of Long Beach, which together with the Los Angeles port handle 40% of seabound imports, the executive director was less optimistic on the outlook.
Mario Cordero, in a briefing on Wednesday, cited the unpredictability of the pandemic and historic import volumes as challenging factors.
“We’ll be hard pressed to see more than small gains until perhaps in the fall,” Cordero said. “We need to recognize that the supply chain isn’t so elastic that it can easily handle historic jumps in volume.”
In his interview, Seroka predicted upcoming labor negotiations between dockworkers, taking place between the International Longshore and Warehouse Union representing them, and the Pacific Maritime Association, representing port operators and shipping lines, would go smoothly and not cause disruption.
“I’m optimistic you’ve got professionals on both sides of the table. These dockworkers need to get paid what they’re worth,” he said. “I think everyone understands what’s at stake here.”
There are early signs of improvement. As of late Tuesday, the number of container carriers in the official queue to enter the twin ports of Los Angeles and Long Beach, California, totaled 78, the lowest level since November and down from a peak of 109 a month ago, according to the Marine Exchange of Southern California.
Sea-Intelligence, a Copenhagen-based maritime data and advisory firm, released a report Wednesday suggesting it could take eight or nine months to iron out the disruptions causing record-low reliability in container shipping. The National Retail Federation issued a statement saying imports through the nation’s congested ports are expected to grow modestly during the first half, but continued high volumes will keep pressure on supply chains.
Cordero said expanding hours to increase port capacity should be a main priority, adding that the Biden administration has been helpful in starting the conversation about 24/7 operations. He called on truckers and warehouses to also expand hours.
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