June 10, 2020 / 10:45 PM / a month ago

Port of Los Angeles slammed in May; pandemic, trade war endanger peak season

LOS ANGELES (Reuters) - The coronavirus pandemic and ongoing U.S.-China trade tensions threaten the peak holiday shipping season for the Port of Los Angeles, which just suffered its slowest May in more than a decade, Executive Director Gene Seroka said on Wednesday.

FILE PHOTO: Containers are loaded onto a ship, as the global outbreak of the coronavirus disease (COVID-19) continues, in the Port of Los Angeles, California, U.S., April 16, 2020. REUTERS/Lucy Nicholson/File Photo

The busiest U.S. port and the No. 1 U.S. gateway for ocean trade with China logged its slowest May since the “Great Recession” of 2009.

May volume fell 30% from last year after business shutdowns aimed at controlling COVID-19 infections and U.S. trade policies caused significant damage to global supply chains, Seroka said on a webcast with journalists.

“We believe the effects of these two items will last throughout the balance of 2020,” Seroka said.

“Our traditional peak season is in jeopardy,” Seroka said, referring to the holiday shipping spike that runs from August through October.

Retailers in the United States traditionally start placing orders for holiday goods in June. This year they are grappling with major uncertainties, including increasing coronavirus infections and widespread civil rights protests.

Some economists are forecasting a bounceback in consumer spending in the first quarter of 2021, which would signal an uptick in ocean cargo at the end of 2020, Seroka said.

Meanwhile, cargo ship operators like Maersk (MAERSKb.CO), MSC, and Hapag-Lloyd (HLAG.DE) have canceled voyages to cut costs and adjust to the sharp reduction in demand.

As stores begin to open, space on some ships is becoming tighter.

Sensing opportunity, Zim Shipping Line Network later this month will launch a 12-day express service from South China to the Port of Los Angeles - its first U.S. West Coast services since 2015.

Reporting by Lisa Baertlein in Los Angeles; Editing by Bernadette Baum and David Gregorio

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