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  • Writer's pictureStephen Fodor

‘March madness’ at LA port amid ‘once in a lifetime’ surge

April 15, 2021

(American Shipper) The flood of imports into the Port of Los Angeles is relentless. More records were set in March. And volumes are expected to remain at peak levels — with container ships to remain stuck at anchor — until June.

“I would describe this as the port version of March Madness,” said Port of Los Angeles Executive Director Gene Seroka during a press conference on Wednesday. He described last month’s import flows as “remarkable” and a “once-in-a-lifetime event.”

Los Angeles handled 957,599 twenty-foot equivalent units (TEUs) in March, up 113% year on year — the highest March number in the port’s history. “If those containers were placed end to end they’d stretch from Los Angeles to New York and halfway back across the country,” Seroka said.

“That’s a big number for a peak month like September or October. But we’ve never seen volume like this in the first half of the year.”

Loaded inbound containers totaled 490,115 TEUs, up 122% year on year, the highest monthly import tally since October. Loaded outbound containers totaled 122,899 TEUS, up 1% year on year. Outbound empty containers totaled 344,585 TEUs, up 219% year on year.

Ships at anchor down, but still high

There have been a lot of headlines about the “parking lot” of container ships at anchor in San Pedro Bay, awaiting berths in Los Angeles and Long Beach. According to the Los Angeles Signal data platform, average time at anchor as of Wednesday was still eight days. That’s higher than seven- to 7.5-day anchorage times reported in January and February.

Seroka said that there were 20 ships at anchor on Wednesday, which he compared to the single-day peak of 40 on Feb. 1 and surmised, “The number has been cut in half.

Looking at the data more broadly, the improvement is not nearly so substantial.

Daily anchorage counts from the Marine Exchange of Southern California show that the year-to-date average is 29.6 ships at anchorage per day. That average was exceeded as recently as April 2. The average for April to date is 24.1 ships per day — 18.5% lower than the year-to-date average.

“We want to get that to zero ships,” said Seroka. “The goal is to clear out the anchorages and have the ships come straight to berth. In the interim, we’ve probably got another really strong six weeks of digging to do.” He said he expects “to see vessels at anchor probably through the end of May or beginning of June.”

Good news, bad news on land side

Despite stubbornly high anchorage waits off Los Angeles, Seroka pointed to improvements in landside metrics.

The number of labor shifts was up 13% in March versus the four-year average. In the terminals, container dwell time last month was 3.8 days, down from a high of five days in February. Outside the terminals, street dwell time — the waiting time at warehouses — fell to 6.8 days from a high of 7.6 days in February.

The challenge, Seroka explained, is that the 6.8 days of street dwell time “compares to the model created for chassis provision of 3.5 days. Every additional day that containers sit waiting for warehouse space means we theoretically need an additional 3,000 chassis.”

The rail situation is an even bigger problem. “Rail dwell time is up to nearly 11 days, which is extremely high for us,” he acknowledged. “The rapid succession of vessel calls, the inclement weather across the country and the one-way trade surge make it difficult to get rail cars, engine power and crews back to Los Angeles fast enough.

“One of our largest terminals reported to me this morning that from once having 9,000 rail units on the ground waiting to move, that number is down to 4,000.”

Rail data is showing a highly unusual shift in westbound volumes to the ports of Los Angeles and Long Beach. Loaded inbound rail containers, including 20-, 40- and 45-foot units (SONAR: IRAILINTL.LAX), have usually been around double the volume of empty rail containers arriving at the Southern California ports (SONAR: IRAILINTE.LAX).

But this year, volumes of loaded and empty rail containers have converged. And this month, empty rail containers inbound to Los Angeles/Long Beach have actually exceeded inbound containers laden with export cargo — an extremely rare event.

Empty containers versus exports

“The madness continues with the empties,” said Seroka, referring to outbound empty container volumes loaded on ships in Los Angeles in March.

Last month saw the highest-ever number of empties loaded on ships in Los Angeles. The four-to-one gap between empty export containers and full export containers “is the highest gap we’ve seen in recent times,” he added.

Asked why this was occurring, he responded, “It’s quicker [for ocean carriers] to get the empties onto the ships and to the next point of origin in Asia to recycle them and have them come back as imports than it would be for the additional transit time to reach U.S. exporters here and then deliver exports to Asia consignees on the other side of the Pacific.

“So, they’re trying to cut down the transit time and catch up on the massive orders for imports and the next round to come to the U.S.”

Higher imports equals higher empties

Throughput data shows that most of the surge in outbound empties is a side effect of the surge in U.S. imports, as opposed to a substitution of empties for exports. The clear pattern over time: The more or less boxes coming into Southern California full of cargo from Asia, the more or less boxes available to turn around quickly and send back to Asia empty.

American Shipper analyzed the combined monthly volumes of the ports of Los Angeles and Long Beach for imports, exports and empties from January 2018 through last month.

The trend line for exports is generally flat, extending well before the onset of COVID and the subsequent import surge, and is not reverse-correlated with empties. But the trend line for empties is highly correlated with imports. In other words, most of the rise and fall of empties is due to the rise and fall of imports.

Even so, the data does suggest some substitution of outbound empties for export boxes. Comparing Q1 2021 to the more normal Q1 2019 (Q1 2020 was heavily skewed by COVID), export volumes through Los Angeles/Long Beach fell 10%, while outbound empties totaled 69% of import volumes in Q1 2021 versus 62% in Q1 2019. More of the import boxes are being turned around and sent back empty than usual.

A different pattern in 2021

Perhaps the biggest takeaway from the combined Los Angeles/Long Beach throughput data is what didn’t happen this year. In February-March in 2018, 2019 and 2020, import volumes fell significantly, as they traditionally do at that time following Chinese New Year (the effect was heightened in 2020 by COVID lockdowns).

In fact, exports briefly exceeded empties in both March 2018 and March 2020 — and came close in March 2019 — as empties were pulled down in unison with the seasonal drop in imports.

This year, the pattern is very different. The first-quarter import drop was minimal and off a historically high base, and imports began rising again in March. As a result, the gap between exports and empties didn’t close as usual.

As Seroka put it: “I have not witnessed a sustained import surge of this magnitude in all of my years in the industry.”

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