We hosted a call with Port of Los Angeles Executive Director Gene Seroka. Import trends are expected to be healthy in January and February, but a slowdown is expected post-Lunar New Year. PoLA is supportive of the Union Pacific-Norfolk Southern transcontinental merger but noted 50% of shippers they speak to do not support it. Inland Empire warehouse vacancy rates are at healthy levels despite some reports of national tightness.
Import trends in January and February should remain healthy, though March is expected to soften following the 2/17 Lunar New Year.* Order demand post-Lunar New Year is expected to be incrementally soft, with some factories taking a longer holiday break due to less demand. Comps off 1Q25 are not clean due to the magnitude of front running of tariffs. Ocean shippers face more questions than answers as it pertains to tariffs, potential refunds and ever-changing rules, according to Seroka. He has even more concern if SCOTUS (Supreme Court of the United States) shoots down tariffs, which would likely increase uncertainty given the Administration has promised to find other ways, potentially elongating the uncertainty period. Shippers just want to know the rules of the game, which has been expressed vehemently to the PoLA. Overall, the Seroka believes total volumes will be down 4%-5% this year.
The PoLA is supportive of UP’s transcon merger though acknowledges it must pass necessary approvals and customers must get on board (roughly 50% of shippers Seroka speaks to support the merger). A transcon merger would give the PoLA access to an additional one-third of the U.S. without having to make multiple handoffs. New York/New Jersey ports, which have a different freight mix, should be able to grow into more Latin American and European markets if the West Coast gains more share of Asia freight. Seroka seemed skeptical that a transcon rail merger would remove a significant number of trucks off the highway, considering two-thirds of the cargo from the PoLA moves via truck to local markets and warehouses in the Inland Empire, and 60% of all cargo that leaves California moves by rail.
Despite nationwide data suggesting healthy/low inventory levels, The Inland Empire is seeing healthy vacancy rates at ~7%, suggesting space is available. Commentary indicates that transcon domestic intermodal might not see a catalyst from warehousing trends in Southern California, though the possibility remains that lower inventories mid- and downstream could spur activity. Bonded warehouses are still a negligible consolation in tariff relief for shippers, given small square footage and permitting timelines.
Global manufacturing continues to diversify away from China and into alternative locations such as Southeast Asia and Mexico, but this will be a slow process, with Seroka noting that it would “take the manufacturing capacity of 10 Vietnams to match just Southern China (Guangzhou).” China used to account for 60% of LA import volumes, which fell to 40% last year amid trade shocks, and Seroka could see Chinese share falling into the 30% range.
The Port of Los Angeles remains focused on expanding capacity to enhance competitiveness. Pier 500, the first new terminal construction project in decades, is expected to be a 10-year buildout that will equip the port with two million containers of additional capacity. Other projects include the overhaul of the West Basin Terminal and the Vincent Thomas Bridge proposal, which would allow the port to handle larger vessels. In addition to large infrastructure investments, the PoLA remains engaged with technological modernization and AI adoption in the form of digital twin technology, geospatial mapping and predictive analytics.
*Lunar New Year is often called Chinese New Year because it’s China’s most important holiday, but it’s also celebrated by many other Asian cultures (like Korean Tết and Vietnamese Tết Nguyên Đán) using variations of the lunisolar calendar, making “Lunar New Year” a more inclusive term that honors all traditions. In China, it’s officially known as the Spring Festival (Chūnjié).
