Lots More on What America's Busiest Port is Seeing from the Trade Tariffs

Summary

Odd Lots - Episode: "Lots More on What America's Busiest Port is Seeing from the Trade Tariffs"

Release Date: June 6, 2025

In this episode of Bloomberg's Odd Lots, hosts Joe Weisenthal and Tracy Alloway delve deep into the ramifications of recent trade tariffs on the United States' busiest port—the Port of Los Angeles. Titled "Lots More on What America's Busiest Port is Seeing from the Trade Tariffs," the episode provides an illuminating analysis of how shifting trade policies are impacting import volumes, small and medium-sized businesses, and ultimately, American consumers.

Current State of the Port of Los Angeles

The episode kicks off with a candid conversation between Joe and Tracy, setting a lighthearted tone before transitioning into the core discussion. They introduce their guest, Gene Sirocca, the Executive Director of the Port of Los Angeles, who provides an expert perspective on the current state of the port amidst fluctuating trade policies.

Gene Sirocca shares alarming statistics: “Over the last seven days here at the largest port in the Western Hemisphere, we've averaged five container ships a day. Normally at this time of year, it would be about 10 to 12 ships in port every single day” (03:19). This significant reduction in ship arrivals underscores the immediate impact of trade tariffs on import operations.

Impact of Tariffs on Import Volumes

The discussion pivots to the effect of tariffs on import behaviors. Gene explains that the average tariff rate, initially spiking to 145%, was later reduced to 30% after meetings in Geneva. However, this reduction did not reinvigorate the import community as expected. “A lot of American importers simply slammed on the brakes when they saw the 145%. … But what I'm not saying are a lot of new orders because 90 days is a short period of time in our business” (04:10).

Joe highlights the precarious position of retailers who operate on long cycle orders. He remarks, “if you're a big retailer, maybe you can like take the risk… But for smaller ones… that's probably not enough certainty” (05:00). Gene confirms that the majority of importing companies at the Port of Los Angeles are small to medium-sized businesses, lacking the capital to absorb high tariffs or invest in inventory buffering.

Challenges for Small and Medium-Sized Businesses

Gene elaborates on the struggles faced by smaller importers: “They didn't have the wherewithal in some cases to be able to front load, inventory, push carrying costs out or get extra warehousing” (05:45). This financial strain forces these businesses to make tough choices, often opting to either accept high costs or risk becoming uncompetitive against larger counterparts.

The conversation underscores the uneven playing field created by tariffs, where large corporations can leverage their resources to mitigate impacts, whereas smaller businesses bear the brunt of increased costs and disrupted supply chains.

Port of Los Angeles Corporate Structure and Staffing Challenges

Delving into the operational aspects, Gene discusses the corporate structure of the port and the role of labor unions. He explains, “the dockworkers, the International Longshore and Warehouse Union, 15,000 strong members… are hired by the Pacific Maritime Association” (09:14). The port’s reliance on a unionized workforce introduces another layer of complexity in managing staffing amidst fluctuating import volumes.

Additionally, the port is experiencing a significant reduction in job openings for dock workers—down almost 50% over recent weeks—highlighting the broader economic implications of the tariff-induced slowdown.

Measures to Enhance Operational Efficiency

Reflecting on lessons learned from the 2021 port congestion crisis, Gene outlines the strategic measures implemented to enhance efficiency and prevent future bottlenecks. “During 2021, the average container that was to leave the port by truck sat for 11 days. Today, that average container is sitting for three days” (13:17). This drastic improvement in container turnover is attributed to enhanced collaboration with rail and trucking firms and a focus on speeding up cargo movement.

Gene emphasizes the importance of velocity in port operations: “It's about how fast we can unload a ship and get the cargo on and off the port property quickly” (12:44). These operational optimizations have enabled the port to handle more vessels and cargo efficiently, even during peak seasons.

Forecasting and Future Outlook

When asked about forecasting amidst the uncertainty of trade policies, Gene admits the challenges but remains cautiously optimistic. “Traditional forecasting is super difficult right now… But we are able to predict quite a bit” (10:33). Utilizing robust information systems and long-standing industry relationships, the port anticipates continued fluctuations in import volumes but remains steadfast in its strategic planning.

Looking ahead, Gene warns of potential consumer impacts: “With high tariff levels and increased prices to the buyer, folks just slammed on the brakes… So likely we'll see fewer selections on store shelves and online buying platforms and higher prices” (16:29). This slowdown in imports is expected to translate into limited product availability and elevated consumer prices, affecting everyday shoppers.

Corporate Branding in Logistics

In a lighter yet intriguing segment, Tracy and Joe explore Gene’s earlier comments about the pricing of container gantry cranes on Alibaba. This discussion reveals the critical role of branding in the logistics industry. Gene clarifies, “They come in different colors because companies have logos, they've got color schemes. Branding is really important in this business” (14:46). Different shipping companies use color-coded cranes to signify their brands, enhancing visibility and recognition across the global trading network.

Conclusion

The episode concludes with a recap of the challenges and strategic responses at the Port of Los Angeles. Gene Sirocca provides a sobering reminder of the interconnectedness of global trade policies and their tangible effects on supply chains and consumer markets. Hosts Joe and Tracy wrap up the discussion with humorous banter, highlighting the human element behind complex economic issues.

Key Takeaways:

• Reduced Import Volumes: The Port of Los Angeles is experiencing a significant drop in container ship arrivals due to high tariffs, impacting overall trade flow.

• Struggles of Small Businesses: Smaller importers are disproportionately affected by high tariffs, lacking the resources to mitigate increased costs.

• Operational Improvements: Strategic measures implemented since 2021 have enhanced port efficiency, reducing container turnover times and increasing cargo handling capacity.

• Consumer Impact: Ongoing import slowdowns are likely to lead to product shortages and higher prices for American consumers.

• Importance of Branding: Branding plays a crucial role in the logistics industry, aiding in the identification and differentiation of shipping companies.

This episode of Odd Lots offers a comprehensive analysis of the ripple effects of trade tariffs on one of America's busiest ports, providing listeners with valuable insights into the complexities of global trade and its direct implications on the economy and everyday life.

Notable Quotes:

• Gene Sirocca [03:19]: “Over the last seven days here at the largest port in the Western Hemisphere, we've averaged five container ships a day. Normally at this time of year, it would be about 10 to 12 ships in port every single day.”

• Joe Weisenthal [05:00]: “If you're a big retailer, maybe you can like take the risk… But for smaller ones… that's probably not enough certainty.”

• Gene Sirocca [05:45]: “They didn't have the wherewithal in some cases to be able to front load, inventory, push carrying costs out or get extra warehousing.”

• Gene Sirocca [13:17]: “During 2021, the average container that was to leave the port by truck sat for 11 days. Today, that average container is sitting for three days.”

• Gene Sirocca [16:29]: “With high tariff levels and increased prices to the buyer, folks just slammed on the brakes… So likely we'll see fewer selections on store shelves and online buying platforms and higher prices.”

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Produced by Carmen Rodriguez and Dashiell Bennett, with contributions from Moses Andam and Kale Brooks. Sound engineering by Blake Maples. For ad-free listening, Bloomberg subscribers can access all podcasts through Apple Podcasts.

Transcript

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[Mark Reap]

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[Tracy]

When.

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[Tracy]

Radio News Joe, did you know you can buy a container gantry crane on Alibaba?

[Joe]

Oh, I think I saw that. How much is it?

[Tracy]

They have different price points, as you might imagine, but I'm looking at one right now that's 37,000 to 28,000. Ooh. And it's customizable. You can change the color.

[Joe]

Some of those prices for, like, industrial equipment on Alibaba are. Are so cheap that, like, I cannot believe they're real. I think they are real, which is sort of the scary part. Or at least in terms of from the perspective of an American industrial perspective. I think in many cases they are actually real. But I still can't believe what's theoretically available. I did a deadlift.

[Tracy]

I am both the most popular trader and most successful trader at Citadel.

[Joe]

Fed is going viral.

[Tracy]

Barges.

[Joe]

This is an After School special, except.

[Tracy]

I've decided I'm gonna base my entire personality going forward on campaigning for a strategic pork reserve in the US Black gold. These are the important questions. Is it robots taking over the world?

[Joe]

No. I think that, like, in a couple years, the AI will do a really good job of making the Odd Lots podcast. One day, that person will have the mandate of heaven.

[Tracy]

How do I get more popular and successful?

[Joe]

We do have the perfect guest.

[Tracy]

You're listening to Lots More where we catch up with friends about what's going on right now.

[Joe]

Because even when the odd lots is over, there's always lots more, and we.

[Tracy]

Really do have the perfect guest. I'm very curious. Why would you need a gantry crane in a specific color? Like, is branding very important for these things?

[Joe]

I don't know. You know who might know?

[Tracy]

Oh, yes. So we have with us Gene Sirocca, the executive director of the Port of LA, which is the busiest port in the U.S. welcome back to the show, Jean.

[Gene Sirocca]

Tracy. Joe, good to be here.

[Tracy]

So one of the reasons we wanted to talk to you is obviously there's a lot of confusion about what's going on with trade policy right now. And you know, we talked on the show about the potential for empty shelves in America if goods aren't coming in any longer. And so I really wanted to go kind of directly to the source and figure out exactly what is going on in terms of imports right now. So we thought you were the perfect person to catch up with.

[Gene Sirocca]

Your timing is impeccable because over the last seven days here at the largest port in the Western hemisphere, we've averaged five container ships a day. Normally at this time of year, it would be about 10 to 12 ships in port every single day. Subsequently, job openings for our dock workers are down almost 50% over the last several weeks.

[Tracy]

So this is really interesting because, you know, on the one hand we've had the delay in tariffs, the 90 day delay, and who knows what's going to happen after that. So you expected to see a drop in traffic in April and early May. But on the other hand, you could see some front loading of traffic going into the port as people try to get ahead of the new deadline. But that's not what you're seeing right now.

[Gene Sirocca]

No, not at all. And the thing of this is, Tracy, that 30% tariffs is simply an average and that's still really high. A lot of American importers simply slammed on the brakes when they saw the 145%. And after the Geneva meetings, it was said that they dropped down to 30%. That wasn't met with a lot of enthusiasm in the import community. So you've still got some cargo coming in. Folks went back and scooped up what had been manufactured. Others let orders complete that cycle before shipping out. But what I'm not saying are a lot of new orders because 90 days is a short period of time in our business. That's traditionally how long it takes for an importer to put that paperwork into a factory in Asia, make the product and simply get it ready to ship to the United States. We're a long way from there.

[Joe]

That's really interesting because in a lot of the conversations that we've had, you know, they're long cycle orders, right? So, you know, you talk about retailers and they're thinking about October or they're thinking about Halloween or maybe they're thinking about Thanksgiving or maybe they're thinking pretty soon they're going to be thinking about Christmas. I guess from that perspective, a 90 day window for some retailers, it must be a pretty big risk. If you're a big retailer, maybe you can like take the risk that like, yeah, you know, they'll probably extend it again, et cetera. But I, my guess is, you know, for smaller ones, like that's probably not enough certainty that they're not going to end up with a bunch of goods that they have to pay a huge bill on at the end.

[Gene Sirocca]

That's right, Joe. And the majority of the companies that import through the Port of Los Angeles are small to middle sized businesses.

[Joe]

Why is that? Wait, I didn't know that. Explain that further.

[Gene Sirocca]

Yeah, yeah, yeah. We've got 125,000 companies that call LA's port home for all their imports. And we know the big box retailers, the home improvement stores, an equal amount of cargo comes in as parts for American factories. But of those 125,000 importing companies, the great majority of are those smaller to mid size, even family businesses. They didn't have the wherewithal in some cases to be able to front load, inventory, push carrying costs out or get extra warehousing. So they're still having to make the choice right now to buy at these extraordinarily high levels. And I call 30% extraordinarily high because if they do bring those products in, they're likely not going to be able to pass on those costs to their customers because they become uncompetitive with the big guys.

[Tracy]

This is something that we hear over and over again in the tariff discussions, which is, you know, for the big guys, they have certain levers to pull. As you point out, they can front load some of their orders because they have the capital, the cash to get through that or they could try to negotiate prices with their suppliers, things like that. But the smaller guys seem to really struggle here.

[Gene Sirocca]

That's exactly right. And what we're hearing on the ground, there's a parts supplier for the big three automotive companies in Detroit that's right up the freeway from us here at the port. And they're telling me that their effective tariff rate is 57.5% on these auto parts that go to the plants. Now here's the dilemma. If they slow down too much or stop buying because 57 and a half percent is too much, they run the risk of shutting a factory line down. Back in Detroit. If that happens, it costs the auto manufacturer between two and four million dollars an hour, hour in lost sales wages and cost structure. It's unbelievable.

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[Joe]

Can I get you a refill?

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[Joe]

Of curious about Port of Los Angeles corporate structure. You mentioned the dock worker job listings are currently down. Like what is the structure employs them? Who's putting up those listings? If someone is a dock worker, what company are they working for and what companies and what are those companies relationship to your entity? The Port of Los Angeles, Joe.

[Gene Sirocca]

The dockworkers, the International Longshore and Warehouse Union, 15,000 strong members here at the twin ports of Los Angeles and Long beach are hired by the Pacific Maritime Association.

[Joe]

Okay.

[Gene Sirocca]

That's a representative group covering 75 companies in our industry. Think of the shipping lines, the marine terminal operators and the maintenance and repair companies. So each one of these terminals every morning and every evening wants to bring on the dock workers to work at their facility. Here at the Port of Los Angeles, we're a city entity, the Port Authority, if you will. Yeah, our job is that of a real estate company to lease out property to these international and national trading interests to promote trade through this gateway.

[Tracy]

So on this note, I mean, one of the things I wanted to ask you about is how you personally at the Port of L. A are actually dealing with forecasting and coming up with your business plans for the rest of the year because it just seems, I mean, it seems almost impossible at this point. You don't know what's going to happen with the deadline. And then on top of that, you're not really sure what's going to happen with shipping? Because maybe people front load and traffic goes up, although it doesn't sound like that's happening, or maybe traffic goes down because people are just nervous. It seems really, really difficult to make any sort of plan right now.

[Gene Sirocca]

To your point, Tracy, traditional forecasting is super difficult right now, but because we have a great information system, deep relationships in Asia and contacts that span nearly four decades in this industry, we're able to predict quite a bit. For example, last month in May, 17 vessels were canceled that eliminated 225,000 container units coming our way. The drop off was so great that the first time in MEM I can remember that the month of May had lower cargo volume than did the month of April, down 16% when we otherwise should be going up toward peak season. The month of June will have an additional 10 vessel sailings canceled. So I can work from that kind of parameter right now, but we're in the midst of our budgeting season here in the city of Los Angeles. We're trying to make sure that we have everything lined up from proper staffing and training of the workforce all the way to how we're going to carry out these infrastructure projects, digitalization, cybersecurity, as well as our investment in the sustainability programs that we have. Fortunately, we've had a very strong financial policy for the last 10 years, so we'll be able to continue our investment through cycle. But the forecasting end of this is really sketchy.

[Joe]

So obviously the first ever time we talked to you was in 2021, I think during the peak of when everyone was focused on the log jam at the port. So there was so much stuff coming in and there was all of this talk about, oh, there's this big traffic jam and backup, et cetera. When the tariffs first got announced and then there was some talk of rolling back, some people were worried that we get a similar sort of phenomenon where maybe because of the pull ahead, et cetera, that we get another pile up that hasn't happened, but let's just say it did. Let's say something happened and there were a surge of orders tomorrow, et cetera, based on the experience of 2021 and the stress of the 2021. Has anything changed fundamentally at the port that a sudden spike of imports that were sustained. There are best practices that would be able to be put in place today to avoid that sort of bottleneck. The same way like has anything changed or learned that could ameliorate an event like that in the future?

[Gene Sirocca]

Absolutely, Joe. And the first Thing we did was an inward look. What could we learn, do better, replicate from best practices elsewhere. And what we found was that we all started working closer together. We looked at what the root causes were, and again, it's not this simple. Yeah, but it's about the velocity. It's about how fast we can unload a ship and get the cargo on and off the port property quickly. That's what we didn't have in 2021 when those 109 ships were lined up.

[Joe]

So what's changed in terms of your potential velocity today? Why should people think that it could be higher?

[Gene Sirocca]

Well, it's much better. And I'll give you this example. During 2021, the average container that was to leave the port by truck sat for 11 days. Today, that average container is sitting for three days. And that's been a trend for some time now. And I'm not just talking months. The average box that was going out by rail during that time period was 13 and a half days. Right now, it's just shy of four and a half days. So we made a concerted effort to work with rail and trucking firms, importers and exporters to show them the value of speed when it comes to containers resting at any one time at our port. And it's been just a piece of work to continue to move forward with, meaning that we can work the next ship faster. We can put more cargo through here, hire more dock workers and truckers to handle that volume, and it's grown exponentially. The last point here is that because we started seeing front loading of cargo last summertime, we went 10 consecutive peak season, like months from July through April, and not one ship was backed up. We moved more cargo during that time than we did at the height of 21 or 22.

[Tracy]

How many cranes for containers did you purchase off Alibaba at that time?

[Gene Sirocca]

Unfortunately, based on the opening back and forth between you and Joe Tracy, I have never seen a gantry crane in 25 to $35,000 sale price.

[Tracy]

It is a little suspicious, isn't it?

[Gene Sirocca]

They do come in different colors because companies have logos, they've got color schemes. Branding is really important in this business. But the average gantry crane on the ground right now, and we have 86 of them, is about 12 million bucks.

[Tracy]

Oh, wow.

[Joe]

These are must be little toy versions. But wait, why is branding important? I'm looking at every picture I have of the Port of Los Angeles. They all look like this sort of very satisfying aquamarine or like a blue or something like that. Why is branding important in the logistics shipping business?

[Gene Sirocca]

Well, just like it would be in clothing or footwear or for your favorite sports team, it really identifies the company apmt, headquartered in the Hague with their parent company Maersk in Copenhagen, is a light, we would call it a Carolina Blue Phoenix owned by cma. CGM in Marseille, France, is red, white and blue mirroring that French flag. And then we go over to Evergreen, based in Taiwan, and as you could imagine, green gantry cranes, green containers. So that branding across an industry of maybe 10 major players really identifies. As you see a box moving on a train, off a ship, with a truck through your city, you know who they are.

[Tracy]

Yeah, I have to say I have a little miniature evergreen container on my desk. It's actually, it's a Kleenex box, I guess.

[Gene Sirocca]

Oh, the green.

[Tracy]

Yeah, yeah. And it's a very bright green. Evergreen's colors. Okay. So one of the things we've been talking about on the show is this idea that if imports into the US Are slowing down, eventually you might see some shortages or at least lack of options at stores, let's put it that way. When would you expect the slowdown in containers shipping to actually hit the shelves and affect the American consumer later this summer?

[Gene Sirocca]

Tracy? And this is why, when we've seen 60 different announcements on trade policy and tariffs since January, even the most seasoned professional is having a difficult time keeping up with this. But I think one thing is consistent that with high tariff levels and increased prices to the buyer, folks just slammed on the brakes, hit the pause button on business and hiring capital investments and said let's see how this thing shakes out. Because there could be new information that comes out in two hours, two days or maybe even two weeks. Not sure how this is all going to end. So I'm going to buy the bare necessities. And we're seeing that now with these single digit container ship volumes at the Port of Los Angeles on a daily basis. So likely we'll see fewer selections on store shelves and online buying platforms and higher prices. Fulfillment rates will also look different if a blue, red and white shirt option are not moving at high levels. You're not going to see them replenish just to top off inventory, but you likely will see the item that's selling get a backfill. And that just looks different from a supply chain perspective. Right now, the month of May that just closed would normally see a flurry of purchase orders over to Asia factories getting ready for the year end and Christmas holiday seasons. We're not seeing that at this point.

[Tracy]

All right. Well, Gene, thank you so much for coming back on and giving us an update on what you're seeing. It was really good to get your perspective.

[Gene Sirocca]

Tracy. Joe, great being with you again. Thank you.

[Joe]

Thanks, Gene.

[Tracy]

Joe, what color should my crane be?

[Joe]

I don't know. Some sort of nice yellow or something.

[Tracy]

I don't know. No, not yellow.

[Gene Sirocca]

Bright red.

[Tracy]

Pink.

[Joe]

Pink. I wonder. Pink crane. That would be the same.

[Tracy]

I think that'd be great.

[Joe]

I don't get color and logistics very much. Yeah, I agree with you. Lots More is produced by Carmen Rodriguez and Dashiell Bennett with help from Moses Andam and Kale Brooks.

[Tracy]

Our sound engineer is Blake Maples. St. Paige Bauman is the head of Bloomberg Podcasts.

[Joe]

Please rate, review and subscribe to odd lots and lots more on your favorite podcast platforms.

[Tracy]

And remember that Bloomberg subscribers can listen to all our podcasts ad free by connecting through Apple Podcasts. Thanks for listening.

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