Episode Transcript
[00:00:03] Speaker A: Hello, welcome to the Freight Buyers Club and here we are in the Port of Long beach, in the Port of Long Beach's fantastic office and I'm with Chief Operating Officer Dr. Noel Hachigaba. Hello, how are you?
[00:00:14] Speaker B: I'm great, Mike. Welcome to Long Beach. So glad to have you here.
[00:00:17] Speaker A: Thanks for having me. It's quite interesting times, isn't it? Can you give me a feeling for how 2024 went with the context? I'll just explain to our listeners and viewers. The context being Eastern Gulf coast strikes were looming right through most of 2024 and then towards the back end we had the threat of tariffs. How did that play out in terms of demand for your port services?
[00:00:42] Speaker B: Well, for us, 2024 ended up being our best year on record, 9.6 million TEU. In large part because of what was happening on the east coast. A lot of cargo diverted in our direction and then towards the end of the year, the threat of tariffs also led to shippers front loading a lot of their cargo. So the end result for the Port of Long Beach, 9.6 million to you. But here's the better news. Not only did we handle more cargo than ever before, but we did so without any backlogs, delays or congestion. And if you remember, during the supply chain crisis, the last time we set an all time record in 2022, it was characterized by a lot of delays, a lot of congestion. We have not seen any of that sort. Everything's been fluid. We've been able to manage all that historic volume and so far January 2025 is looking very strong.
[00:01:32] Speaker A: How did January 2025 compare to a year earlier? We obviously we had. The Chinese Lunar New Year skews things slightly, but it was a good start to the year. Was it?
[00:01:41] Speaker B: It was a great start. In fact, year over year, January 2025 was about 42% ahead of last year, 952,000 TUs. So that is our second busiest month in our history.
[00:01:56] Speaker A: What's your expectations for the rest of this year? Is we've seen a drift between ports on different coasts in the past, normally due to union action. Is some of this traffic going to head back east?
[00:02:06] Speaker B: Well, I think it depends largely on how shippers respond to these threats of tariffs that we've been hearing about. I think it depends also on how they mitigate some of these other factors, whether it's the Panama Canal, the Red Sea and some of these other global factors that have cascaded across the global supply chain. But what we like to tell our shippers is if they're looking for a backup plan. If they're looking for capacity, if they're looking for reliability, we have it here in Long Beach. We have a lot of available capacity. We have a lot of coordination happening between all segments of the supply chain. So we're feeling very confident about our ability to handle that.
[00:02:47] Speaker A: Another factor we didn't really mention there that might have played into your hands was the closure of the Red Sea to most of container shipping.
Well, from the end of 2023, if that reopens, is that a negative for you in terms of the competitiveness versus east coast port options?
[00:03:04] Speaker B: I think it remains to be seen we were not directly impacted by what's happening at the Red Sea. What we did see here on the west coast of the US is we saw some of the shipping lines repurposing some of their, their vessels to accommodate the, the additional need that they had to circumvent the Red Sea. So we're not 100% sure that we'll be impacted in any negative way. Like I like to say, you know, cargo always follows the path of least resistance. What we have here on the west coast is a lot of capacity. We have a lot of reliability and fluidity and, and we have extraordinary coordination to make sure that we can handle any amount of cargo that comes our way.
[00:03:43] Speaker A: With these rising volumes, record volumes, what sort of investments have you been making or do you have planned in either the infrastructure or the superstructure around the port?
[00:03:53] Speaker B: So we're preparing for the future. You know, there's an old quote I like to use that the best way to predict the future is to create it. And here at the port of Long beach, we are on, on, on the quest to future proof our port. Over the next 10 years, we plan to invest $2.3 billion to upgrade our infrastructure, expand our capacity, especially on the rail side, and ensure that we're transitioning to zero emissions operations. So we feel very optimistic that in the long term, all of these investments will put us in the best position to compete for cargo and to also demonstrate that you can grow and grow green.
[00:04:34] Speaker A: And can I do another final question? I think we've seen this big restructure of the container shipping alliances this year. Has that meant any changes into how the terminals are being run or operated? Or is that something that the lines and the port operators deal with?
[00:04:48] Speaker B: You know, so far we haven't seen any impacts. And what we're hearing from the shipping lines and from the terminal operators is we don't expect to see any significant or material changes. All the shipping lines that call our port terminals, for the most part have their services committed to those terminals. So we do not expect to see a lot of change. However, if there is more volume that comes our way, we will be ready for it. We have the capacity, we have the coordination across the segments, and we feel very bullish about our ability to handle that.
[00:05:20] Speaker A: And just on a slight negative, we've got this threat of tariffs. We don't really know where they'll go this year. Is the wider port community, your customers, essentially. Are you getting a sense that they're worried about this, that maybe they're less confident they were, say, a year ago, and that maybe that may be slightly bearish on volumes, perhaps at all, or you're not concerned about that at all?
[00:05:44] Speaker B: Well, there's definitely a lot of concern that we're hearing from the shippers and some of our partners. And we all went through this back in 2018, 2019, during the last US China trade war here in Long beach because of our heavy reliance on Asia, China principally, we saw our container volumes drop by about 20%. And I think that memory and that experience has some in the shipping community nervous about what a new round of tariffs could mean, specifically those on China. But it remains to be seen. I mean, we. Things are moving so quickly, Mike, as you see, you know, we're following the news cycle and things are shifting by the minute, literally. So it remains to be seen where things land. The important thing for our shippers to know is that here at the port of Long beach, we're prepared for any swings in cargo volumes.
[00:06:35] Speaker A: Dr. Noel Hachigaba, thank you very much for joining me on the Freight Bay Club.
[00:06:39] Speaker B: My pleasure. Thanks for having me.
