<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=393225&amp;fmt=gif">
Port_of_LA_Pier 300_400 Container Terminals

West Coast and California Logistics Blog

West Coast Supply Chain News Brings Cautious Optimism

Wed, May 31, 2023 @ 07:29 AM / by Weber Logistics

Around this time last year, every article about the West Coast supply chain painted a dire picture. There was an armada of ships waiting to enter the Ports of L.A. and Long Beach; there was no warehouse space to be had; and trucking capacity was scarce. Because of these and other factors, logisticians began to look seriously at non-West Coast options for their freight and distribution.

A year later, however, the news is changing. And for the better.


Imports are up

West-Coast-Supply-Chain-bigstock-316260793US import volumes are rising, approaching pre-pandemic levels. According to Freight Waves, US imports in April are up 9% compared to March, and up 5% vs. April 2019 before the pandemic.

Compared to March, April imports into the Port of Los Angeles increased by 22,514 TEUs or 7%, while imports into the Port of Long Beach were up 17,735 TEUs (or 6%).

US imports from China – which had declined since the Fall of 2022 – accounted for the biggest spike, rising 27% over March.

These numbers have led to optimism among those involved in port operations. Port of Los Angeles Executive Director Gene Seroka was recently quoted in The Loadstar, saying “Despite the current headwinds, we are forecasting volume growth from one month to the next.”

A word of caution: While these increases are welcome news, what would be even more welcome is a resolution to the West Coast port negotiations. According to Weber Logistics VP of Transportation, Gary Kendle, once an agreement is finally reached, the discretionary cargo that moved away from the West Coast, may finally come back – and give a sustained boost to import volumes.

It is worth noting too that East Coast ports will have their own negotiations coming up, impacting ports from Maine all the way to Texas.


Read the new Weber Logistics eBook, Supply Chain Agility: The New Logistics Superpower


Warehouse vacancy up; rates down

In July 2022, the Commercial Observer reported that the L.A. area is effectively out of warehouse space. Any space returning to the market had a waiting list of tenants before being listed. Asking rents in the area rose for an 8th consecutive quarter.

Almost a year later, the alarm bells regarding West Coast warehousing are subsiding – at least temporarily.

According to GlobeSt.com, a leading industrial real estate publication, the industrial vacancy rate within the Inland Empire in Q1 2023 increased to 2.8%. While this is still very low compared to other markets nationally, it is a big leap forward from last year when vacancy rates were an almost nonexistent 0.4%.

Savills, a leading global property agent, said it “expects rental rates to plateau and then start to decline as economic challenges arise.”

A word of caution: These higher vacancies and lower rates are a product of the lower import volumes into the West Coast and fears of an economic downturn. If West Coast imports continue to rise, we could be right back to historically low vacancies as competition for warehouse space heats up again.


Trucking capacity readily available

During the past few years, trucking capacity has been very tight and spot rates have hit historic highs. The inverse is now occurring, where spot rates are plummeting, and capacity is very easy to come by.

As evidence of this shift, Freight Waves reports that tender rejections have reached an all-time low of 2.53%. This is even lower than the rejection rate during COVID lockdowns (2.57%).

A tender rejection occurs when trucking companies have very high volumes of shipments and can pick and choose the loads they want to take. This typically occurs when capacity is very tight and spot rates are very high.

The low number of rejections now means that supply is greatly outpacing demand, and trucking companies will take almost any load (within reason).

A word of caution: After the past few years of extremely tight capacity and higher trucking rates, the large increase in capacity may feel like a welcome respite for shippers. The bad news is that it is not sustainable. Trucking companies cannot afford to exist in this market for long, especially with the costs of doing business only growing higher – and with an ongoing driver shortage to contend with. The fear is that a prolonged period of supply and demand imbalance will force many truckers, especially the smaller carriers, to go out of business. This would lead to fewer trucks on the road and a return to a tight capacity market.


Turn to a West Coast 3PL to navigate the West Coast supply chain

Weber Logistics is a West-Coast-based 3PL provider that can help you adapt to changing market conditions. With 16 distribution centers across California combined with asset-based drayage and final mile trucking services, we have the infrastructure to support your growth – and the supply chain agility to adapt your operations to ever-changing market conditions. To learn more about the benefits of working with a true West Coast logistics expert, contact Weber today.



Topics: Southern California Ports, West Coast Distribution, Port Logistics, west coast warehouses, Warehouse Rates, logistics in California

Written by Weber Logistics

Subscribe to Instant Updates

Recent Posts

Posts by Topic

see all