Port of the Week! - Los Angeles and Long Beach, CA

Southern California’s ports of Los Angeles and Long Beach comfortably outpace the rest of America’s ports in container throughput. The two of them (combined) handled over 19 million twenty-foot equivalent units in 2022—placing them within the world’s top ten busiest gateways. This performance rivals large Asian ports, like South Korea’s Busan and China’s Tianjin. By virtually every measure, Los Angeles and Long Beach are America’s bastions of international trade, supported primarily by imports from Asia.

As America’s largest ports, stakeholders are well aware that Los Angeles and Long Beach could have targets on their back from cyber assailants. The shipping industry has seen cyberattacks terrorize ports in all corners of the world. From South Africa to Japan, various international ports have been compromised to certain extents at the hands of bad actors. U.S. port infrastructure is not impregnable to such a threat either.

That’s why it makes sense when Port of Los Angeles Executive Director Gene Seroka lauded President Joe Biden’s appeal for increased cyber security investment across America’s ports. In an interview with the American Journal of Transportation, Seroka noted the president’s executive order as “a wakeup call for all of us in the port and supply chain industry”. President Biden’s order calls for $20 billion into U.S. port infrastructure over the next five years, while also requiring maritime operators, like carriers and terminals, to ramp up their cybersecurity and reporting of related incidents. The U.S. Coast Guard will also be endowed with the authority to implement measures which aim to prevent and detect malicious cyber activity.

Seroka added in the interview that the Port of Los Angeles has been a trailblazer of safe cyber operations. He noted that the port is responsible for opening the first cyber security operations center ten years ago. Per his words, “Last year, [the center]…stopped nearly three quarters of a billion intrusion attempts.” The cyber security center began operating in September 2014, with supportive funding from the U.S. Department of Homeland Security. Seroka implores that all U.S. ports should erect a center like this.

Panama Canal, East and Gulf coast labor talks could bring more market share to USWC

While, one issue—cybersecurity—poses no upside, ironically, some other issues front and center in 2024 could present a silver lining for the Southern California ports.

Amid external supply chain events and labor anxieties, Los Angeles and Long Beach could pluck some more market share in 2024. Drought-related impacts, while hopefully alleviating in the coming months, remain a hurdle for U.S. shippers who traditionally use the waterway. Due to restrictions and elevated transportation costs, it has become common for many to reroute from the canal to the West Coast, notably Los Angeles and Long Beach. From there, they will truck and rail their cargoes across the country. Stakeholders are optimistic that the April return of Panama’s “rainy season” will quell disruptions at the canal, but for the foreseeable future, Southern California remains a safety valve for East and Gulf coast shippers.

The other significant factor that could drive more volume to Los Angeles and Long Beach is labor uncertainty surrounding unionized East and Gulf coast dockworkers. The International Longshoremen’s Association (ILA), the trade union representing these workers, and the United States Maritime Alliance (USMX), representing maritime employers, are negotiating for a new coastwide labor contract.

As the industry learned from last year’s protracted labor impasse on the West Coast, differences between the negotiating parties may present friction from getting a deal done within a reasonable timeframe. Furthermore, ILA’s leadership have been more outspoken than their peers on the West Coast. The union vows that its rank-and-file members will strike on Oct. 1 if an agreement is not reached prior to their existing one expiring Sep. 30.

If that truly is the case, and a coastwide strike were to occur along the Gulf’s and East’s shorelines, disruptions would be imminent. The West Coast, headlined by Los Angeles and Long Beach, would assume heightened roles as panicked shippers would look to avert the East and Gulf coasts.

As is typical with active contract negotiations, information and updates regarding the East and Gulf Coast talks are limited. For the most recent news surrounding it, as well as a timeline from when the talks began, please refer to this week’s InterlogUSA blog: What We Know So Far About the East and Gulf Coast Dockworker Contract Talks