The Port of Los Angeles Executive Director Gene Seroka joins Yahoo Finance Live to weigh in on how Red Sea shipping disruptions have impacted global trade routes. In light of recent attacks, he says shipping companies have made "subtle moves" west "to avoid some of those hot spots."
While some East Coast-bound cargo gets rerouted through LA to circumvent danger zones, Seroka doesn't expect a major surge locally. With vessel movements visible weeks in advance, the port has time to "prepare for cargo uptakes" from route diversions.
However, Seroka notes attacks "really gum up the works in the supply chain." Unlike the West Coast, regions like Europe rely solely on Egypt's Suez Canal for Red Sea access. Ongoing incidents that force new routes can add extended transit times and costs exceeding $1 million per voyage.
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Editor's note: This article was written by Angel Smith
Video Transcript
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AKIKO FUJITA: Shipping companies are scrambling to find alternate routes as their vessels continue to face attacks from Houthi militants in the Red Sea. That's leading to widespread disruptions with 30% of cargo headed for US ports on the East Coast typically passing through the Suez Canal. The Port of LA is looking to pick up some of the load even as it faces a surge in shipments stemming from another disruption, low water levels in the Panama Canal. Let's bring in Gene Seroka. He's Port of LA's executive director.
Gene, it feels like we're getting a lesson in how interconnected global shipping is right now when you consider all of the disruptions we've been watching. Let's start with the Suez Canal. What's been the direct impact on the Port of LA?
GENE SEROKA: Good morning, Akiko. On the Suez Canal, limited. I just came back from a four-city tour in Asia, started off in India then went to Vietnam and Indonesia. And what shippers and exporters are telling me is that they're starting to make some subtle moves to the West Coast trying to avoid some of those hot spots, but not a deluge of freight coming our way. What I can tell you is at the Port of LA is running at about 75% of capacity. So for those companies that need assistance, we're here.
RACHELLE AKUFFO: And so, Gene, I mean, the Port of LA the busiest and largest port in the United States. How do you prepare for the potential influx as we are seeing some of these diversions coming from the East Coast ports?
GENE SEROKA: Well, Rachelle, it's not going to be a huge surge. All of our simulation and from the port optimizer, our port community system, we could see upstream about 40 days before a vessel is arriving here in Los Angeles. So it allows us to prepare our great skilled labor, our land, and machinery to get ready for cargo upticks.