LA Port Forecasts 9.3M TEUs, Down 7%, as China Share Drops to 40%

Why is LA port volume falling in 2026?

The Port of Los Angeles expects to handle 9.3 million twenty-foot equivalent units (TEUs) in fiscal 2026-2027, a 7% decline from the prior year. The Los Angeles Board of Harbor Commissioners approved a $3.4 billion annual budget June 12 to cover the shortfall. China's share of all containerized imports through Los Angeles has fallen to about 40% in 2026, down from 53.4% in 2025 and 61% in 2020. Port management cited continued volatility in global trade and uncertainty about trade policy as contributing factors to the more cautious cargo volume outlook.

The San Pedro Bay complex, which includes neighboring Long Beach and comprises the busiest U.S. container gateway, has felt the effects of the Trump administration's trade war with China. Ongoing tariffs and other measures have pushed importers to increasingly seek alternative maritime routes into North America through Mexico and Canada. China has also sought out new trade agreements in Africa and boosted business with Europe as it makes plans to sustain its massive export economy, the world's largest.

What the volume drop means for drayage and intermodal lanes

A 7% container decline at LA translates to roughly 700,000 fewer TEUs moving through the port in fiscal 2026-2027. That volume represents thousands of drayage moves that won't happen and intermodal loads that won't originate from Southern California. The shift matters for small fleets running LA-area drayage or long-haul intermodal lanes out of the San Pedro Bay complex. Importers rerouting cargo through Mexico and Canada are creating new cross-border truck demand while pulling volume from traditional West Coast lanes.

The port's $3.4 billion budget represents a $665 million increase over fiscal 2025-2026, mostly on a 31% expansion for capital improvements. The budget also includes higher subsidies for the Port's Clean Truck Fund Rate and cost-of-living increases for staff salary and benefits as the port accounts for outside inflationary pressures. Projected operating revenues of $826 million represent a 26% increase year-over-year, with shipping services accounting for 65% of that. Operating expenses are projected to rise by 6% to $452 million.

LA invests $74M in rail expansion despite volume forecast

Capital improvement spending will set a 10-year mark and center on container terminal modernization and transportation improvements in and out of the port. Construction has started on the $74 million rail expansion at Berths 302-305 and $130 million SR 47/Vincent Thomas Bridge interchange reconfiguration. A request for proposals for Pier 500 at Terminal Island, the first new container terminal in decades, was issued in late 2025. The 200-acre terminal will feature two new berths and 3,000 linear feet of new wharf designed for larger next-generation container ships in natural deep water.

Expansions are planned at cargo terminals operated by Fenix Marine Services and LATiL, a unit of Mediterranean Shipping Co. A new cruise facility to replace and expand existing operations was announced earlier this year. The hub is owned and operated by the City of Los Angeles through its Harbor Department.

"The passage of this budget reflects the strength and forward-looking vision of the Port of Los Angeles. We're enhancing our infrastructure, advancing our sustainability initiatives, and ensuring we keep the port competitive in the global economy," said Los Angeles Mayor Karen Bass in a statement. Bass, who has championed environmental investments that help the port meet water and air quality requirements and advocated for the port's economic role, thanked Executive Director Gene Seroka and Commission President Lucille Roybal-Allard for their leadership.

How trade policy is reshaping West Coast freight patterns

The 13-percentage-point drop in China's share of LA imports in one year (from 53.4% in 2025 to 40% in 2026) represents a structural shift in how cargo enters North America. Importers seeking alternatives to direct China-to-LA routes are building new supply chains through Mexican ports like Manzanillo and Lázaro Cárdenas, then moving goods north by truck. Canadian ports in Vancouver and Prince Rupert are also capturing volume that previously landed in Southern California.

For small fleets, the shift creates winners and losers by lane. Carriers running cross-border Mexico freight or Pacific Northwest intermodal are seeing intermodal volume up 10% as trucking rates push shippers to rail. Fleets tied to LA drayage or traditional West Coast long-haul lanes face a shrinking load pool. The port's 7% volume decline is not a temporary dip tied to seasonal patterns or a single quarter of weak imports. It reflects a multi-year realignment driven by tariffs, trade policy uncertainty, and China's pivot to other export markets.

The $74 million rail expansion and $130 million interchange project suggest port management expects the infrastructure to outlast the current trade war. The Pier 500 terminal, designed for next-generation container ships, is a bet that LA will remain a major gateway even if its share of total U.S. imports shrinks. For carriers, the question is whether the volume that leaves LA for Mexico and Canada ever comes back, or whether the new routes become permanent fixtures of North American freight patterns.