Los Angeles Wildfires Boost Breakbulk Shipping Demand

The recent wildfires in Los Angeles have resulted in catastrophic damage, affecting thousands of homes and businesses. Estimated costs of the disaster range from $250 billion to $275 billion, marking it as one of the most expensive natural disasters in US history. According to Drewry Maritime Research, the aftermath of this disaster is set to significantly increase the demand for bulk and breakbulk shipping due to reconstruction activities. The ports of Los Angeles and Long Beach are expected to experience a surge in imports of construction materials, while exports are likely to decline.

Impact on Breakbulk Cargo Imports

The demand for non-containerized general and project cargo at Los Angeles and Long Beach ports has risen significantly over the past five years, with imported commodities such as iron and steel, plastering materials, lime and cement, and machinery being central to reconstruction. These commodities currently account for a substantial portion of seaborne imports at these ports, with breakbulk cargo playing a significant role in meeting the needs of rebuilding the affected areas.

The imposition of a 25% tariff on imports from Canada and Mexico could further inflate costs, potentially leading to sourcing materials from distant destinations. While this scenario may drive up shipping costs, it could also boost demand for bulk and breakbulk shipping through increased tonne miles. Reconstruction efforts, however, are expected to commence only after a period of planning and preparation, allowing tariff implications to take effect during this interval.

Implications for Domestic Production and Exports

Domestic consumption of construction materials will increase during the rebuilding process, limiting export potential. The most commonly exported commodities—ores, steel products, construction materials, and oil seeds—are likely to see reduced availability for foreign markets. Exports of forest products and timber, which form a small but significant portion of non-containerized exports, may face disruptions as transportation networks recover from wildfire-related damage.

Transportation and Logistical Challenges

The wildfires have caused significant disruptions to transportation networks, resulting in road closures and detours that complicate trucking operations. High winds have intensified these challenges, increasing the risk of supply chain disruptions and delivery delays. This has created logistical hurdles for both imports and exports, further impacting the flow of goods.

The wildfires in Los Angeles will drive a sharp increase in imports of construction materials at the ports of Los Angeles and Long Beach, while exports, particularly of timber and forest products, are expected to face challenges. Key trading partners, including China, Japan, and South Korea, may encounter difficulties in securing timber imports, while Canada, Vietnam, and Mexico may need to increase production to meet the increasing demand for construction materials during the rebuilding phase.