Van Nuys, CA, June 18, 2010: The increase indicates that retailers are restocking store shelves in anticipation of more consumer spending and is another sign that the economy is picking up steam, analysts say.
Trade numbers were up sharply in May at the ports of Los Angeles and Long Beach, the nation's busiest seaport complex, officials said Friday, another sign that the economy is picking up steam.
For Los Angeles, which ranks first in cargo container traffic, it was the port's second-best May ever, eclipsed only during the height of the global economic boom in 2006. The Port of Los Angeles saw imports surge 12.5% compared with the same month a year earlier. Export traffic grew more than 5%.
The increases were even stronger at Long Beach, which is second only to Los Angeles in container traffic. Imports there rose nearly 27% compared with May 2009. Long Beach's exports were up more than 14%.
"That's very good news, which says that world trade is picking up," said Nigel Gault, chief U.S. economist for Lexington, Mass., business forecasting firm IHS Global Insight. "Retailers had cut their inventories to the bone. They think that sales will pick up and they needed to reorder. That's the one thing that can cause a big swing in trade numbers."
More than 40% of the nation's imported products come through the ports of Los Angeles and Long Beach, making them an important predictor of the health of the U.S. economy in the months to come. Goods arriving at the ports in May will be on store shelves this summer.
One example of the improving business climate could be found at Superior Crankshaft, which employs about 30 people in Irvine. After a slow 2009 sales year, owner Gerold Pankl is ordering more steel and expecting a strong surge of business for his crankshafts, which can cost as much as $10,000 each and have been used in the signature factory race cars of such automakers as Ferrari.
Pankl imports some of the high-grade steel he uses through the two ports, and sends his products mostly to Europe, Asia, Australia and the rest of the U.S. by air freight.
"We think our business will be up by about 35% this year and by 40% next year," said Pankl, who opened the crankshaft business in 2004. "When we started, we were concentrating on the U.S. market. Now we are focusing on exports and going global."
For Los Angeles, Orange, Riverside, San Bernardino and Ventura counties, the effect of port traffic change is immediate. Nearly 483,000 jobs are related to international trade in the region, said Jack Kyser, an economist at the Los Angeles County Economic Development Corp.
The supply chain that reaches from Asian factories to U.S. store shelves is several months long, according to Jock O'Connell, international trade advisor for Beacon Economics in Sacramento.
The nation's biggest retailers are placing their orders now for goods that will be manufactured and shipped in time to reach store shelves for the holiday retail season, O'Connell said.
The two ports' overall May traffic was boosted by huge increases in the number of empty containers shipped back to Asia; Los Angeles posted a nearly 58% increase in the number of empty containers leaving the port while Long Beach reported an increase of more than 35%.
Port officials said that was a hopeful sign because those "empties" were needed to carry imports from Asian factories to the U.S. and other international destinations in the coming months.
The view from the ports carried some welcome changes from the dismal days of 2009, when the recession was at its worst and even veteran dockworkers were unable to get work more than three days a week.
"The vessels that are coming to the port are larger, and they are arriving full," said Philip Sanfield, spokesman for the Port of Los Angeles, noting that the traffic in May included business from a new shipping line called Containership Co., which has offices in Norway and Denmark. "These are very encouraging numbers.""
Art Wong, spokesman for the Port of Long Beach, said it looked like the economic recovery was finally underway.
"All of our numbers in May — imports, exports and empties — were the highest we have seen since 2008," Wong said. "We still have a long way to go to get back to where we used to be, but this is very good news."
Still, some experts said it was too early to tell whether the numbers would herald a sustained boost in consumer spending and international trade.
Trade "has been very up and down in the last few months," Gault of IHS Global Insight said. "There have been a few blockbuster months and other months where there have been pullbacks. We have been more up than down, but it has been uneven.""
Port of Los Angeles imports increased 12.5% in May to 342,171 containers compared with a year earlier. Exports rose 5.3% to 160,621 containers. Overall for the year through May, the port's business was up 11.4% to 2.9 million containers.
Long Beach imports improved 26.8% to 264,505 containers compared with May 2009. Exports there rose 14.5% to 138,659 containers. Overall traffic at the port through May was up 18.5% to 2.3 million containers.
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