Container imports soar at busiest US port in May as buyers try to outrun rising fuel costs

By Lisa Baertlein

LOS ANGELES, June 16 (Reuters) – Imports to the busiest U.S. container port in Los Angeles hit the second-highest level in history during May, as retailers rushed in products like plastic school supplies before cargo ship owners start recouping higher fuel costs from the Iran war on July 1.

The Iran war has ​snarled shipping in the Middle East and reduced the availability of crude oil and its derivatives used to make plastic and other goods. Marine fuel costs have soared and some retailers and manufacturers are also worried that key raw materials and factory goods could become scarce or too expensive to ship. 

Companies are weighing energy costs, tariffs, inventory needs and geopolitical risks as they make sourcing and shipping decisions, Port of Los Angeles Executive Director Gene Seroka said on Tuesday.

“When they find a window of stability, many are moving quickly to take advantage, speeding cargo through the supply chain while conditions allow,” Seroka said. 

The Port of Los Angeles handled a total of 840,165 20-foot equivalent units (TEUs) in May. That included ​449,370 TEUs of imports, a 26% increase from the year earlier, when since-struck down tariffs on U.S. imports caused shippers to slam on the brakes, data showed. A TEU is a standard measurement of volume for ocean cargo. A typical shipping container ​is 40 feet.

June and July volumes are shaping up to be even stronger than in May, said Seroka, who added it would take months for supply chains to normalize after the Iran war hostilities stop and the vital Strait of Hormuz shipping chokepoint reopens. 

FUEL PRICE RISES

The price of vessel bunker fuel across 20 global ports nearly doubled in March to $1,053 from the price before the start of the U.S. and Israeli attacks on Iran and then retreated on the possibility of a ceasefire deal. 

Nevertheless, starting on July 1 vessel operators will begin clawing back higher fuel costs in contracts that cover the bulk of cargo that moves.

Adding to pressures, 10% global Section 122 tariffs could expire in late July and the Trump administration has proposed new tariffs of up to 12.5% on imports from 60 countries tied to allegations of forced labor. 

Tuesday’s results from the Port of Los Angeles came after supply chain technology provider Descartes Systems Group said total U.S. container import volumes jumped 11.5% in May from a year earlier.

Imports of plastic goods falling under the standardized, globally recognized Harmonized System code 39 increased 26% to 251,706 TEUs, according to import data analyzed by Descartes Datamyne. That included a nearly 87% increase in imports of plastic office or school supplies and a 57% increase in plastic tableware and kitchenware.  

(Reporting by Lisa Baertlein; Editing by Jamie Freed)