Los Angeles wildfires – A catalyst for breakbulk shipping demand amid rebuilding efforts

The wildfire has caused severe damage, affecting thousands of homes and businesses. AccuWeather estimates the cost of the disaster at $250 billion to $275 billion, while Goldman Sachs considers this one of the costliest natural disasters in US history. As an aftermath, the region will need massive reconstructions, which will increase the cargo imports considerably at the West Coast of the US, especially at the Los Angeles and Long Beach ports.
Effects on breakbulk cargo demand – Imports
The following analysis is limited to non-containerised general cargo and project cargo imported at Los Angeles and Long Beach ports over the past five years. Most imported commodities are iron and steel, plastering materials, lime and cement, nuclear reactors and machinery. While exports are likely to contract, imports will rise because of a strong demand for these commodities, driven by reconstruction activities.
We have focused on imports of construction materials at these ports over the last five years. They account for 25% of the total seaborne imports of non-containerised goods (excluding liquid bulk and roll-on/roll-off cargo). This highlights the significance of these imports, where breakbulk cargo constitutes a substantial share, thereby increasing shipping demand.
Additionally, Trump’s plan to impose a 25% tariff on imports from Canada and Mexico, starting 1 February, will inflate import costs. If tariffs are slapped, it could lead to two scenarios:
Import costs from neighbouring countries will rise;
Shipping costs will also expand, if the US decides to source construction materials from farther destinations.
Both scenarios will lead to higher overall import costs, putting pressure on businesses and consumers. On a positive note, increased tonne miles will boost the demand for bulk and breakbulk shipping.
Since reconstruction efforts are expected to take time before commencing, it allows the tariff implications to be in effect during this period. This scenario also presents an opportunity for domestic production to increase, which could potentially meet export demand by the time materials are needed.
Effects on breakbulk cargo demand – Exports
The reconstruction activities will impact exports from these regions, as domestic consumption will increase and limit the potential for exports. The most exported commodities during this period were ores, steel products, other construction materials and oil seeds. While the total exports of forest products and timber from these ports account for 1.5% of total seaborne exports of non-containerised goods (excluding liquid bulk and roll-on/roll-off), the sheer volume of these exports makes them significant. Their destinations are typically distant countries, making this a long-voyage trade.
The wildfires have disrupted transportation networks, resulting in road closures and detours that hinder trucking operations and complicate supply chain continuity. High winds have exacerbated the situation by heightening the risk of broader disruptions. Transportation services are experiencing interruptions leading to delivery delays and logistical challenges.
Conclusion
We anticipate difficulties for exports and imports due to logistical challenges and the need for reconstruction work. Imports of construction materials will surge, while exports of timber and forest products are likely to face obstacles. Key countries such as China, Japan, and South Korea may face challenges related to timber imports. In contrast, Canada, Vietnam, and Mexico will need to ramp up production to meet the increasing demand for construction materials during the rebuilding phase.
Source: Drewry