2023 Outlook: What to Expect at the Port of Los Angeles and Port of Long Beach

On the evening of Tuesday, February 7, 2023, The Harbor Transportation Club (HTC), now a part of the Los Angeles Transportation Club (LATC), hosted the return of their Year-in-Review and 2023 Year Outlook. The event featured a round table discussion with Mario Cordero (Executive Director, Port of Long Beach) and Gene Seroka (Executive Director, Port of Los Angeles), moderated by the Senior Editor of Journal of Commerce’s (JOC) S&P Global Market Intelligence, Bill Mongelluzzo.

The executives briefly reviewed 2022 ocean freight and port operations, focusing primarily on their projections for the year ahead. Freight Right Founder & CEO Robert Khachatryan also attended and provided a summary of the discussion and his professional insights on what he expects to see unfold in 2023. 

Key Takeaways

• Labor issues continue to be an issue for Southern California ports, although the conversations between employers and unions appear to be making progress and cargo is still moving.
• Port velocity improvement solutions are still highly focused on extending gate operations and improving appointment systems. The 24/7 port operations and implementing a universal appointment system for all 12 terminals remain elusive targets.
• While import volumes are down substantially from 2021, a sudden surge in inbound containers would likely result in very similar disruption and congestion as the first time.
• Supply chain complexity and technology disparities will continue to mean slow progress for the industry, but small, incremental change is necessary to keep the needle moving. 

2023 Year Outlook: Projections & Port Priorities

The atmosphere in the room seemed to be a very friendly one. Mario Cordero, the Executive Director of Port of Long Beach, certainly made it seem like it. He insisted that the conversation between International Warehouse and Longshore Union (ILWU) and the employers was very amicable, that cargo was moving, and that it would continue to move.

Mr. Cordero repeatedly stressed the need to extend gate hours and move to 24/7 operations to manage congestion at the ports and avoid a repeat of the 2021 port crisis. He also questioned why the industry could embrace emission-related policies for implementation deadlines well into the 2030s but couldn’t establish a 24/7 framework to make immediate improvements in port operations over the next several years. 

Bill Mongelluzzo of JOC raised the question of having a single universal appointment system across all 12 terminals in the Ports of Long Beach and Los Angeles, asking point blank if Mr.  Seroka and Mr. Cordero believed it was feasible and if they would support the implementation. The members of the LATC clapped enthusiastically in support of this potential solution. Mr. Cordero seemed to disagree with the notion of a universal system as the solution, noting that the idea had been circulating for many years but that there was lower-hanging fruit that should take priority. He took the opportunity to reinforce further his opinion that extending gate hours and addressing the issue of missed and no-show appointments would be more beneficial at this time. 

Mr. Seroka took a more direct stance, stating that the technology already existed . He addressed the feasibility issue of a universal appointment system, pointing out that investments in existing systems - primarily operated by private for-profit companies - would remain viable and useful, feeding into a universal appointment system as the data aggregator.  According to Mr. Khachatryan, this seems to indicate that a single-system aggregator may be a trucker-facing appointment solution. In contrast, the existing systems of appointment infrastructure to the terminals would plug into it on the backend. He concluded that the challenge of implementing a universal system was not a matter of technology but of personalities and priorities.

The Big Picture for 2023

After hearing various perspectives on port operations in the year ahead, Freight Right CEO Robert Khachatryan offered his insights on the bigger picture for the ocean freight and port industries in 2023. 

The underlying concern for everyone involved in supply chain and port operations is the drop in U.S. imports. The estimates range from a 17% to 27% decrease, depending on who you ask, but ultimately, we probably won't see a return to 2021 volumes anytime soon. 

Unfortunately, even if we were to see those volumes again, we would likely end up with the same sort of disruption we saw over the last 2.5 years. This is primarily due to the complexity of the global supply chain, the number of players involved, and varying levels of technological capabilities, which collectively slow progress in container shipping or port logistics operations on a large scale. 

On the one hand, so many forces clash in the industry that progress happens very slowly. But on the other, the industry as a whole is for-profit, and there is no motive for these companies to develop excess infrastructure and capacity. As a for-profit industry, the goal is to optimize our resources for maximum utilization. Maintaining excess capacity in anticipation of the next unprecedented disruptive event will always be considered a waste of resources and poor use of capital.  

Ultimately, small changes and incremental improvements are the best strategies for long-term progress in an ever-evolving industry like supply chain and logistics. We learn what we can from past disruptions to drive change, but by definition, disruptions will be disruptive. Whatever we build now, and however we optimize now, the next disruptive event will throw another curveball and we’ll be forced to adapt yet again. 

To that end, the relatively small changes of implementing a universal appointment system or moving Los Angeles and Long Beach ports to 24/7 operations may effectively make some improvement, but likely not at a large enough scale. Without extending 24/7 operations throughout the Southern California supply chain system, we will still be limited in the amount of cargo that can be processed through the existing infrastructure. This is a good start, but the conversation must continue and expand to be truly transformative.