LA Port: Importers Faced With Significant Uncertainty
Summary
- US Agriculture Export Collapse: Soybean shipments from the Port of LA to China plummeted 90% last year. Contracts have shifted to Brazil and Argentina, locked in for 3-12 months, making immediate recovery unlikely.
- Supply Chain Diversion: China's share of Port of LA imports dropped from 60% (2018) to 40% (2025). The volume has successfully shifted to Southeast Asia (Vietnam, Indonesia, Malaysia, Cambodia).
- De Minimis Impact: The removal of the $900 "De Minimis" loophole has significantly increased taxes on direct-to-consumer parcels, impacting small businesses and logistics carriers like FedEx.
- Export Weakness: While imports show resilience via shifting origins, US exports have declined in 9 of the last 13 months, creating a widening trade deficit.
Trade Ideas
Eugene Seroka
Executive Director, Port of Los Angeles
"Soybean shipments from the United States to China last year were down 90% and down 80% from our port alone." Seroka notes that buyers have moved to Brazil and Argentina with contracts locked for "three, six and 12 months." Agriculture is a transactional business heavily reliant on export volume. The loss of the primary buyer (China) to South American competitors—who now hold the active contracts—leaves US soy producers with a massive demand void that cannot be filled domestically. Bearish US agricultural commodities, specifically soybeans, due to structural loss of market share. A sudden trade deal or "phase one" style agreement mandating Chinese purchases could reverse this, though Seroka views this as unlikely in the immediate term.
Eugene Seroka
Executive Director, Port of Los Angeles
While China's share of imports dropped to 40%, the Port saw a "net increase in imports to the United States from Vietnam, Indonesia, Malaysia, Cambodia." The "China Plus One" strategy is no longer theoretical; it is showing up in hard shipping data. Manufacturing capacity and capital investment are flowing into Southeast Asia to bypass tariffs and geopolitical friction. These markets are the direct beneficiaries of US-China decoupling. Long Southeast Asian Emerging Markets as they capture manufacturing value added previously domiciled in China. Infrastructure bottlenecks in these developing nations could cap their ability to absorb further volume.
Eugene Seroka
Executive Director, Port of Los Angeles
The "De Minimis" loophole (allowing packages under $900 to enter tax-free) was pulled, raising taxes dramatically. Seroka explicitly mentions "activity on the legal side today from Federal Express based in Memphis." The closure of this loophole hurts the high-volume, low-margin direct-to-consumer shipping model (e.g., Shein/Temu flows). If taxes rise, volume drops. FedEx's legal involvement signals this is a material risk to their cross-border parcel volume. Watch for volume compression in international small-parcel segments for major logistics carriers. Domestic volume growth could offset international declines; carriers may successfully pass costs to consumers.
Eugene Seroka
Executive Director, Port of Los Angeles
"We've also seen exports decline nine out of the last 13 months... exports have been left behind." While the US consumer continues to import (fueling the trade deficit), US manufacturing is struggling to sell abroad. Seroka notes US manufacturers only export 1% of their output. Without export growth, the industrial sector is capped by domestic demand, which is facing affordability headwinds. Avoid US-centric industrial exporters until trade policy shifts to favor outbound goods. A weaker US Dollar could suddenly make US exports more attractive.
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Speakers: Eugene Seroka · Tickers: SOYB, VNM, EIDO, EWM, FDX, UPS, XLI