A troubling trend has emerged at the Port of Los Angeles, the nation's busiest port, as new data reveals a significant decline in cargo volume, with exports to China taking a particularly hard hit. This downturn adds to the challenges faced by the freight trade industry, raising concerns about the future of global trade dynamics.
The China Factor: A Missing Link in Trade Agreements
Despite commitments made by China to increase its purchases of U.S. agricultural products, the promised surge in trade has yet to materialize. This has contributed to a near three-year low in cargo volume at the Port of Los Angeles, with a notable 12% year-over-year decline in January. Gene Seroka, the port's executive director, points to a drop in agricultural exports as a major factor, with exports to China described as "dismal."
Agricultural Exports: A Crucial Blow
The impact on agricultural exports is particularly concerning. Containerized exports to China have decreased by a substantial 26% last year, with the Port of Los Angeles reporting a significant drop in soybean exports, a critical agricultural product. In early 2026, President Trump announced that China was considering purchasing an additional eight million metric tons of U.S. soybeans, building on the October 2025 agreement to buy 12 million tons. However, soybean exports from the Port of Los Angeles to China decreased by a staggering 80% last year, with no improvement seen in the months that followed.
Seroka emphasizes the importance of soybean exports, stating that "it's a really important part of the overall export strategy here." He highlights how Argentina and Brazil have stepped in to fill the gap in China's soybean contracts, and cautions that increasing U.S. farm sector exports will take time, as these agreements are not transactional in nature.
Container Counts and Trade Policy Uncertainty
The Port of Los Angeles reported approximately 812,000 twenty-foot equivalent units (TEUs) for the month of January, including imports, exports, and empty containers. This represents a notable decline from the 924,000 TEUs reported in January 2025, which was driven by front-loading of freight ahead of the major holiday period in Asia and the start of President Trump's second-term tariffs. Breaking down the container count, January imports were 421,000 units, down almost 13% from the previous year's higher levels. Exports, on the other hand, saw a drop of nearly 8% year-over-year, with only 104,000 container units processed.
The number of empty export containers, which are typically sent back to Asia during periods of high demand, has also decreased by 12.5% compared to the previous year. Seroka attributes this to the elevated numbers from 2025, when importers were rushing to get cargo in before tariffs took effect. He expects trade policy uncertainty to persist throughout 2026, impacting comparisons with the previous year's figures.
Lunar New Year and Softening Demand
The drop in freight container import volume at the nation's largest port is particularly notable during the Lunar New Year period, a typically busy time for import activity from China and other Asian manufacturing hubs. Companies usually bring in spring and summer items before manufacturing plants in China close for a month to celebrate the holiday. Seroka notes that softer demand for goods is also reflected in February's data, with container counts from arrivals appearing "flat." He projects a decline of less than 10% for the first quarter and does not anticipate a significant drop-off in the economy or cargo volume after that period.
However, Seroka expresses concern about the January numbers, stating that they represent the lowest monthly output in almost three years. He emphasizes the importance of trade policy, arguing that American farmers and manufacturers need to remain competitive in global markets and cannot afford to lose more ground.
Ocean Freight Economics and Market Pressure
As port activity slumps in the U.S., the ocean shipping market feels the pressure. Rates are trending downward, and there is an excess of available container capacity on ships. Peter Sand, chief shipping analyst at Xeneta, attributes this to a widespread drop in ocean freight rates due to the decrease in container volumes. Rates in the "mid-low market segment," typically occupied by larger volume shippers, have fallen by over 18% in the last month, while the market average has decreased by 11.5%.
Sand predicts that shippers paying the market average should expect further softening in rates in the coming weeks, as the market mid-low acts as a bellwether and is seemingly more immediately impacted by the increasing capacity on the transpacific routes. Ocean carriers are expected to respond with "aggressive capacity management," which may involve more blank (canceled) sailings to stabilize falling rates.
Honour Lane Shipping notes that current freight rate levels have "fallen close to or even below" carrier break-even points on all lanes to the U.S. and Canada. The number of canceled sailings starting from the week of February 9 reflects a vessel capacity reduction of 60%, 58%, and 50% on the Asia to Pacific South West, Asia to Pacific North West, and Asia to U.S. East Coast trade lanes, respectively. As a result, containers may be "rolled" once or twice while still in Asia, causing potential supply chain disruptions and delays for shippers.
Offsetting the Decline: Southeast Asian Expansion
While the decline in trade volume from China is a cause for concern, it is somewhat offset by the expansion of manufacturing into Southeast Asian countries. In January, there was a notable 17.8% year-over-year increase in U.S. containerized imports from Vietnam, with imports from Thailand and Indonesia increasing by 36.5% and 18%, respectively. Honour Lane highlights how the expanding sourcing from Southeast Asia is continuing to offset a portion of the decline in China-origin imports.
Seroka acknowledges that the Port of Los Angeles had around 60% of its import business tied to China at the beginning of the first trade war in 2018. Today, that figure has dropped to 40%, and the port has been able to grow due to the combined gains of Southeast Asian countries, including Vietnam, Malaysia, Cambodia, Indonesia, and the Philippines. However, he cautions that these countries cannot fully replace China or even a single province in terms of trade volume.
A Record-Breaking Sister Port
In contrast, the Port of Long Beach, the sister port to Los Angeles, reported record container volumes as a result of the front-loading in 2025. Volume growth was aided by trade out of Southeast Asia, highlighting the shifting dynamics of global trade routes.
This story raises important questions about the future of U.S.-China trade relations and the impact on global supply chains. As the trade landscape continues to evolve, what are your thoughts on the potential long-term effects of these trade dynamics? Do you think the expansion of manufacturing in Southeast Asia can sustain the decline in China-origin imports? Share your insights and opinions in the comments below!
