Port of Los Angeles Executive Director Gene Seroka Talks Imports
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Bloomberg Audio Studios. Podcasts, radio, news. Gene Sirocco, where the Garcetti appointment in 2014 has the most important job in America right now. Everyone on global Wall Street wants his view. We're honored off the red eye that the gentlemen of Los Angeles and Long Beach ports joined us this morning. Just to thank you so much for joining Bloomberg this morning. As simple as I can make it,

What is the single thing you would say today to the longshoremen of Long Beach and Los Angeles? We're going to get through this, even though we're going to be down by 35% next week on cargo volume coming into the port compared to last year. 35%? 35%. Wow.

Major retailers, big importers have said at 145% tariffs, I'm not shipping out of China. I don't know if this could change in two hours, two days, two weeks, so let's hit the pause button. But to the longshoremen, we've had a great fiscal policy in place for a decade. We're going to keep investing. We're going to get through this. Every four containers mean a job at the port. What would you say to 1600 Pennsylvania Avenue when you observe their press moments, their managed messaging?

We're talking about the ground truth. Cargo's down, jobs are down, and this is the dock workers, the truckers, warehouse folks, but also the manufacturing people. This is Los Angeles County. Almost 400,000 people go to work every day in manufacturing jobs. Just in Los Angeles County? In L.A. County. It is the biggest in the nation. Those are the folks that we've got to keep going to.

So tell us how a tariff works. When does it get assessed? How does it get assessed? Who pays it? How does that work? There's a start date that's announced. If your cargo is ingated to that port overseas after the date of announcement, the tariff is applied. It's assessed when it gets off the ship in Los Angeles and assessed by U.S. Customs. Who pays it? The importer of record. Walmart. Walmart.

Big retailer, big manufacturer bringing in parts. They pay for it. And what the CEOs and board members have been telling me is they're going to pass it on to the next in the supply chain. Consumers from the retail guys, the parts are going straight to the factory. Somebody just emails in, what's the COVID equivalent? Is this like, oh, I'm recalling March of 2020. Am I wrong? Yes.

Yeah, it was March and our business was cut in half that month. We only did like 450,000 containers, but it made a quick return as we all started buying online and curbside pickup. I don't know when the return date is going to be just yet. So what are the Walmarts of the world telling you in terms of kind of what they think they're going, how they're going to behave going forward?

Again, hit the pause button. I'm not hiring. Open positions are shelved for the time being. Capital investments are on pause and I'm waiting and seeing. Guys like Walmart and others of the large big box variety started bringing in inventory back last summertime. Campaign trail, folks were talking about different trade policy, tariffs, etc. These guys saw through that a little bit, knowing that this day would come. Where I'm concerned right now, Paul, are

are the small to middle-sized importers that didn't have the ability to bring in inventory, warehouse it, et cetera. Now they're faced with the dilemma of do I buy at these super exorbitant prices?

Can I pass it on and still compete with the big guys or do I just sit and wait? I've got to make payroll next month. With your harbors and with the Queen Mary over on Long Beach, you know, the tourist thing, the fact is the stuff comes off and they get to get on Highway 710 or whatever. What happens on the interstate highways given this crisis? You're going to see truckers who have been hauling four and five containers up till now per day move maybe two or three starting next week.

you'll see less traffic on the roads the warehouses with their vacancy rate at six seven percent that's probably going to dip too retailers have told me that they've got about five to seven weeks left of normal inventory then we'll start seeing spot shortages give us an example of that

You may go to the store and you're looking for that blue shirt. A Duke, perfect, Duke merchandise. Right? You want a nice blue shirt in your size and your style with the right kind of color. You may see 11 purple ones on the shelf and one blue one that just doesn't match your taste.

And the price for that blue one is likely up a lot more than the others. Our interview of the day here. We welcome all of you across the nation, particularly early in the morning on the left coast. Gene Sirocco with us here of the ports of Los Angeles, Long Beach and the rest. Paul. Hey, Gene. Again, we've got a president whose situation is very fluid in terms of his policy pronouncements. If we were to have a president that's maybe dialed back some of the tariff situation, what's the time frame for that?

your whole process, your whole world to start kicking in again. Yeah, Paul, if we reached a deal today as we're speaking with China, whatever that deal may look like, a framework, etc., it would take the shipping lines about two weeks to reposition their vessels to the major ports, Qingdao, Xiamen, Shanghai,

Then it takes another two weeks after they load up to steam over to L.A. So we've got a month once we push the button to say, hey, we're back in business. And that's why this inventory level at the retail folks are telling me about we're starting to we're starting to get a little tight here. You're maybe the one person in America that can answer this with great respect for Ambassador Burns, Nicholas Burns, with his public service to China here in the recent years.

We all understand there's going to be retail shortages here, empty the 400,000 manufacturing types in Los Angeles. Those Chinese names you pronounce correctly that I butcher,

What's this going to be like for the people in those Chinese cities of manufacturing and export? Yeah, Tom, as you remember, I worked in China for about four and a half years. I still maintain very close ties there to the business community. I'm on the phone with guys and friends overnight, every night. And basically, manufacturing has slowed to levels they have not seen before since the COVID times. And if folks are out of work, the government's going to help them out.

They have a social safety net. Yes. So what are you telling, I guess, your workers at the port? I mean, you've got, I remember from, you were so kind to us during the pandemic to explain how this whole supply chain thing works. It's not just the people unloading the cargo, it's the truckers, it's the warehouse employees, it's everybody, right? Right. It's one in nine jobs in the five-county Southern California area. A million people go to work every day based on what we do at the ports of L.A. and Long Beach.

And so what we're trying to do is just keep morale up. Again, let's not blink here. We still got a lot of work to do. The longshoremen, as an example, they can start doing preventative maintenance on the machinery when volume dies down a little bit. The mechanics can get out there in force and make sure that all this equipment is ready when that surge comes back. We're going to be humming. With the truckers, let's move around some domestic freight as well. So we're just trying to keep the morale up, keep the people focused.

on the job as best we can but knowing that we've got a preparation we've got preparation here now right when that cargo picks up we're going to see it 40 days before it actually arrives on our shores right we're going to be ready do you sleep on the red eye or do you work in the red eye you know i got a couple of winks um but you know i mean just getting here to manhattan seeing you guys the energy here and with all that's going on in our industry we're moving you're getting energy from this

This is it. This is a success, John. I sure am. That's how bad things are. Greatly appreciate it. Thrilled to have him with us. That's a gentleman of Los Angeles and all of this important discussion. Gene Sirocco, Chief Executive Officer, the Port of Los Angeles. Switch to Verizon Business and get more from your internet without paying more for your internet. Get LTE Business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data.

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