Containers arriving at the Los Angeles-area seaports surged over the summer, with importers front-running the threat of additional tariffs and the prospect of fuel shortages should the war in the Middle East continue.
This behavior is reminiscent of what occurred in 2025 as businesses pulled forward imports to avoid rising tariffs.
While increases in imports promise to avoid potential inventory shortages for U.S. retailers and manufacturers, at some point along the supply chain, someone will have to absorb the increased price of transporting those goods.
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That cost will drive inflation higher and present further challenges for the Federal Reserve that is focused on restoring price stability and driving inflation back toward its target of 2%.
Take, for instance, the price of bunker fuel in Singapore that has more than doubled at times since the start of the Iran war. Bunker fuel is what powers the container ships from Southeast Asia to Los Angeles, the nearest U.S. seaports.
Once the imported goods get to the seaport, they have to be unloaded and moved by diesel-powered equipment and trucks. Diesel in Los Angeles county is now above $6 per gallon, with reports of prices reaching as high as $8 near the Los Angeles and Long Beach seaports.
The higher cost of fueling the global supply chain suggests a lingering effect on consumer prices and shrinking profit margins should firms absorb some of the increased input prices.
Imports from Asia
Record levels of import containers were processed in June, July and August, averaging nearly 950,000 a month at the Los Angeles-area seaports. This volume suggests an early restocking of inventories before the end-of-year buying season and a restocking of manufacturing inventories should trade be further restricted.
As to the source of those imports and according to Gene Seroka, executive director of the Port of Los Angeles, China has distributed its manufacturing across Southeast Asia, diversifying in response to trade policy. Where China once accounted for 60% of imports arriving at Los Angeles, it now makes up 40%.
Exports from Los Angeles
Export containers processed at the Los Angeles seaports decreased in the summer after peaking in April and May, not unlike the drop in exports after 2017 and the modest recovery after the pandemic.
