The ports of Los Angeles and Long Beach, which handle about a third of all U.S. container imports, recorded their third-busiest month ever in July, narrowly missing their all-time high from May 2021. Back then, a wave of incoming consumer goods had led to supply shortages onshore, and the line of cargo ships waiting offshore for a berth grew longer by the day.

Demand is currently being driven by retailers and other importers stocking up on supplies in anticipation of the imposition of US tariffs on Chinese goods and a possible strike by large groups of American dockworkers – adding to the pre-holiday rush of orders that is typical at this time of year.

The marine terminals in San Pedro Bay in southern California have so far withstood the onslaught, although some are slowly showing signs of capacity constraints.

“We are in a strong position as we enter peak shipping season as consumers purchase school supplies and shippers move goods ahead of potential tariff increases,” Port of Long Beach CEO Mario Cordero said in a statement. “We have ample capacity in our terminals and cargo will continue to move efficiently and sustainably.”

Fear of delivery delays plays a major role in the recent surge in supply efforts.

With six weeks to go before their collective bargaining agreement expires on September 30, talks between the East and Gulf Coast longshoremen’s union and their employers have reached an impasse. Some of the ocean freight that could be delivered through ports from Boston to Houston is therefore being diverted to West Coast ports until this uncertainty is resolved.

According to Sea-Intelligence, a Copenhagen-based maritime data and consulting company, each day of the strike would take about five days for ports to clear the resulting cargo backlog. A one-week strike starting on October 1, for example, would last until mid-November.

“If a two-week strike occurs, ports will realistically not be able to return to normal operations until 2025,” said Alan Murphy, CEO of Sea-Intelligence, in a research note published last week.

In addition, companies are trying to avoid the imposition of higher tariffs on Chinese goods. And if Donald Trump becomes president again next year, he will keep his campaign promise to escalate the trade war with China and increase tariffs on all US imports.

U.S. container imports through major ports will reach 24.9 million this year, measured in 20-foot equivalent units, according to data released this month by the National Retail Federation and Hackett Associates, up 12% from last year and close to levels seen in 2021 and 2022, when they topped 25 million.

LA-Long Beach and other West Coast ports have been losing market share to their eastern competitors for years. Hackett Associates founder Ben Hackett said new concerns about work stoppages at eastern ports have pushed the West Coast’s cargo share “above 50 percent for the first time in over three years.”

Such factors distort the demand picture and make it difficult to predict whether the peak shipping season has already started earlier and trade volumes will soon subside or whether importers will continue to import more goods than usual.

There is also the possibility that consumer purchasing power will reach its lowest point, leading to full warehouses and excessive inventory levels at companies.

The latest retail sales report reflects consumer resilience despite higher borrowing costs, a slowing labor market and an economic outlook clouded by wars and the U.S. presidential election in November.

But with pandemic-related savings now largely depleted and wage growth slowing, many Americans are increasingly turning to credit cards and other loans to finance their purchases.

Cautious consumers

Walmart Inc.’s latest earnings report underscores that U.S. households are becoming more frugal amid economic uncertainty and high interest rates. Americans are also traveling less and putting off major home renovations.

“We see that consumers continue to be demanding, selective and appreciative” and are focused on the essentials, Chief Financial Officer John David Rainey said in an interview on Thursday.

Home Depot Inc. and Whirlpool Corp. lowered their sales forecasts for the year as their customers held back on spending on expensive items and home improvement projects.

So far, however, there has been no decline in consumption in the industry, which handles 80 percent of global trade in goods. When asked whether he saw a recession on the horizon, the head of the world’s fifth-largest container shipping company said that, based on his bookings, this was not the case.

“We were all surprised by the strong demand we have seen since May 1,” Rolf Habben Jansen, CEO of German container shipping company Hapag-Lloyd AG, said in an interview with Bloomberg Television last week. “In fact, this is continuing well into the third quarter.”

At the Port of Los Angeles, preliminary numbers for August show continued momentum. General Manager Gene Seroka said almost all indicators of port efficiency are the same or better than at the start of the recovery, although “we are seeing some micro-issues lately.”

Container dwell times – a measure of how smoothly they are being transported through the port – have risen to over six days. “That’s way too long, it should be between two and four days,” Seroka said.

Problems are also emerging with the availability of truck chassis – a problem that is blamed for the significant delays on the LA-Long Beach section of the route during the Covid shortages in 2021 and 2022.

Nevertheless, he sees no reason for concern. “We have achieved really high productivity in the last three months,” said Seroka.

He said some industry observers believed U.S. imports may have peaked in July, a hypothesis that is consistent with a recent decline in spot transportation rates.

“We’ll see if that’s true,” Seroka said. “A lot depends on the economy.”