During the ongoing 13-month labour contract negotiations at the U.S. West Coast ports, many importers had diverted shipments to alternative ports. Those same importers are bringing back some of that volume, as the route from China to the West Coast remains the fastest and most cost-effective option.
While West Coast ports handled 45% of cargo during the first quarter of 2019, their share decreased to 40% in the same period of 2023. The Port of Los Angeles reported a decline in April volume compared to last year’s record levels but noted an upward trend for the second consecutive month. However, Southern California ports now face additional competition from Mexico, where some companies take advantage of a legal loophole to sell products to U.S. customers without incurring a 25% tariff. Lower warehouse and labor costs in Mexico further contribute to its attractiveness as an alternative.
Given the uncertainties surrounding the ongoing labour dispute on the West Coast, companies are increasingly diversifying their strategies by diverting some of their cargo to other ports as a precautionary measure against potential strikes. To explore these alternative options and develop a comprehensive plan, reach out to your account manager at Canaan Group.
1. U.S. West Coast ports regain lost volume as competitive pressure mounts, Reuters, May 18, 2023. Accessed May 23, 2023.