Los Angeles is forecasting a 7% volume decline and approving a $3.4 billion budget in the same document. The numbers point to a structural shift in trade, not a single bad year.

The Port of Los Angeles just approved its largest capital budget in a decade and forecast its steepest volume decline in years. That apparent contradiction is the story.

The Los Angeles Board of Harbor Commissioners approved a $3.4 billion budget for fiscal year 2026-2027, up $665 million from the prior year, with a 31% increase in capital spending. In the same document, port management forecast a 7% decline in box volumes, to 9.3 million TEUs. Those two facts sitting next to each other tell you almost everything about where American trade stands right now.

The volume decline is real. The more important number is buried inside it. China's share of containerized imports through Los Angeles has fallen from 61% in 2020 to approximately 40% in 2026, a 13-percentage-point drop in the single year from 2025 to 2026 and a 21-point decline over six years. Demand through Los Angeles held up. The supplier base behind it shifted.

The Whipsaw Year

The monthly data tells a story of extremes. January 2026 saw loaded imports fall to 421,594 TEUs, down 13% from January 2025. That sounds alarming until you remember that January 2025 was itself a front-loading peak, with importers racing to beat tariff deadlines. The year-over-year comparisons were punishing against an artificially inflated baseline.

Then the tariff picture shifted. A pause on higher rates pulled cargo forward into one of the most compressed front-loading windows in recent memory. By May 2026, loaded imports reached 449,370 TEUs, up 26% year over year. Total throughput hit 840,000 TEUs, the port's best month of 2026 and 17% above May 2025.

That 26% number requires context. May 2025 was itself unusually weak, down nearly 5% from 2024, so the comparison flatters 2026. Even adjusting for the easy comp, May was a genuine high-water month. The question hanging over the fiscal-year forecast is what happens when that front-loaded inventory lands and sits. If consumers pull back on spending while warehouses fill, summer volumes could fall quickly.

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"We're comparing to elevated cargo levels from last January when importers were scrambling to get cargo in ahead of tariffs. Inventories also remain slightly higher, reflecting that earlier pull-forward and a more cautious pace of restocking."
— Gene Seroka, Executive Director, Port of Los Angeles

Dwell Times, the Congestion Story Nobody Is Writing

The clearest read on how the port absorbed the tariff cycle is not in the TEU counts. It is in dwell time, how long a container sits at the port from discharge to gate-out.

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The week of March 16, dwell at POLA spiked to 68 hours. That was the pressure point: vessels that had been racing to beat deadlines all arriving at once, terminals stretched, truckers and railroads playing catch-up. It was a brief but real congestion event.

Then volumes fell off. By the week of April 20, dwell had collapsed to 19 hours, the fastest gate-out pace in the dataset. An empty port moves cargo fast. As volumes rebounded in May, dwell climbed back to 44.8 hours. The most recent reading, the week of June 22, sits at 41 hours. That is elevated against the April lull but well below the March peak, and within operational normal for a high-volume summer period.

The dwell story is good news for port efficiency. The March spike was sharp but resolved in under three weeks. The May rebound was absorbed without a comparable congestion event. That is a system that learned something from 2021.

68 hrs — Peak dwell, week of March 16, 2026. Vessel bunching after the tariff pull-forward. Resolved within three weeks; down to 19 hours by April 20.

China's Share, From 61% to 40%

The China-share decline is the structural story underneath the monthly noise. In 2020, China accounted for 61% of the containerized imports moving through Los Angeles. By 2025 that share had fallen to 53.4%. In 2026 it sits at approximately 40%.

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The change came in two phases. The first was the gradual diversification of US sourcing toward Vietnam, Bangladesh, India, and Mexico that began around 2018 as the first-generation trade war took hold. The second, the one showing up acutely in 2026, is the current tariff environment. China now carries the highest effective tariff rate of any major US trading partner, and for many discretionary goods the math no longer works. Importers either absorb the cost, find a new source, or route through a third country.

China has responded by deepening trade ties in Africa and building out European demand, constructing the alternative customer base it will need if US access stays constrained long term.

What stands out is that total Los Angeles volume has not fallen in proportion. Vietnam, Bangladesh, India, and other Southeast Asian producers are shipping through LA as readily as Chinese manufacturers once did. The throughput held. The origin mix behind it turned over.

The Budget Bet, Build Now, Fill Later

The $3.4 billion budget, carrying a 31% increase in capital spending, is a statement of conviction that LA will win the next cycle of container growth even if it gives up China share in this one.

The centerpiece is Pier 500 at Terminal Island, the first new container terminal in decades: 200 acres, two new berths, and 3,000 linear feet of wharf built for next-generation mega-ships in natural deep water. A request for proposals went out in late 2025.

The port is also expanding the Fenix Marine Services and MSC LATiL terminals, extending rail capacity at Berths 302-305 ($74 million), and reconfiguring the SR-47 and Vincent Thomas Bridge interchange ($130 million), addressing the landside bottleneck that has constrained drayage efficiency for years.

The underlying logic is straightforward. China's share stabilizes or recovers as trade relationships normalize. Vietnam, India, and Southeast Asia, the sources replacing Chinese goods, ship through LA just as readily. Consumer demand, while tariff-pressured in 2026, does not disappear. The port is spending to be ready for when volume returns in full.

The Number That Matters More Than 9.3 Million

The 7% volume forecast got the headlines. A more revealing figure sits lower in the statistics. Loaded exports from POLA fell to 104,297 TEUs in January 2026, the lowest monthly outbound volume in nearly three years. US containerized exports to China fell 26% last year nationally.

An empty-leg problem is a repositioning problem. Containers that go out full return revenue. Containers that go out empty are a cost. The trade imbalance that has always defined LA, more coming in than going out, is widening, which pushes carriers' repositioning costs up. That puts upward pressure on import rates, one more reason the tariff math on China-origin goods gets harder over time, not easier.

The port that rewrote itself is doing it again. Whether 9.3 million TEUs is the floor or the ceiling of what comes next depends less on what happens in San Pedro Bay than on what happens in Washington and Beijing. The port, for its part, is spending as if it already knows the answer.

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