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'We’ve had 2 huge shocks to the system:' Port of LA's executive director

Akiko Fujita
Anchor/Reporter

As Chinese ports resume activity halted by the coronavirus outbreak, U.S. ports are confronting another challenge — keeping workers healthy enough to handle the flood of imports expected. At the Port of Los Angeles, the country’s largest, Executive Director Gene Seroka says all marine terminals remain “open for business,” albeit with additional cleaning and more stringent health and safety guidelines.

“The emergency orders that came from the state of California, Los Angeles County and Los Angeles City have all defined the port as essential and keeping our supply chains moving is job number one,” Seroka said, in an interview with The Ticker on Yahoo Finance.

From truck drivers to dock workers, the port’s operations touch nearly every part of Southern California, with 1 in 9 jobs in the region tied to it.

The pressure to keep the Port of LA operating at capacity is especially strong, given the disruptions it has experienced from China over the last year. The US-China trade war slowed cargo volume by 16.5% in the fourth quarter. The coronavirus outbreak that followed prompted 41 vessels to cancel through April, representing 25% of the port’s overall operations. 

FILE - In this June 19, 2019, file photo a cargo ship is docked at the Port of Los Angeles in Los Angeles. On Wednesday, Nov. 27, the Commerce Department issues the second estimate of how the U.S. economy performed in the July-September quarter. (AP Photo/Marcio Jose Sanchez, File)

Government figures show container volumes fell 19.8% in February at China’s largest ports at the height of the country’s coronavirus outbreak. 

Trade with China accounts for half the goods that come through the Port of Los Angeles and Long Beach. 

“I see the knock-on effects of this going throughout the rest of the year. We've had two huge shocks to the system,” Seroka said. “What we see happening next is a pendulum effect.”

Closures in China stemming from the outbreak have also led to empty containers piling up at the ports. While the Port of Los Angeles has begun shipping those back to China, Seroka said it would dispatch three additional 23,000 container-unit vessels for three consecutive weeks to clear out part of the port’s inventory. 

Seroka expects volume to decline 18% in the first quarter. 

While he is hopeful Chinese exporters will ramp up in the next few months, Seroka says the full “bounce back” may not materialize for six to eight weeks, with manufacturers operating at just 50% of normal capacity, according to the port’s estimates. 

Other ports have already begun to limit operations amid soft demand. The Port of Seattle shut down two of its four operations last week, while the Port of Houston was forced to close two of its container terminals after a worker tested positive for the virus.

 Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita