No Short-Term Effect of Devalued Yuan

LOS ANGELES—China's recent devaluation of the yuan likely won't have any short-term effects on global trade and the cargo volumes at the Los Angeles and Long Beach ports. In an earlier story, GlobeSt.com reported that the Long Beach Port and Los Angeles Port ranked second and third nationally on JLL's Seaports Outlook Report and Index, while the New York/New Jersey Port ranked first in the nation. After discussing cargo volumes and availability of industrial real estate with Barry Hill, an SVP at JLL, we went back and asked him how some of the financial issues in China might affect our ports on the West Coast, particularly Los Angeles and Long Beach.

“The devaluation move by China will certainly have an impact on global trade dynamics, but we don't necessarily expect to see much of a change in the short-term,” Hill tells GlobeSt.com. “The fact of the matter, this is just one of many impact variables we are keeping our eye on when it comes to the growth of trade volume funneling in and out of the local ports. The widening of the Panama Canal, increasing automation at the ports, and overall efficiency improvements are all things that play into activity at the ports.” 

That isn't to say, though, that the situation in China won't have a longer term affect. The Los Angeles and Long Beach ports are considered gateway ports for the Asian markets, and as a result, already have import cargo volumes that are vastly larger than export volumes, which have seen double digit declines over the last several months. “Ultimately, the devaluation will likely lead to cheaper Chinese goods, driving down import prices,” says Hill. “The extent of impact this will have on volumes at the ports remains to be seen, but will be one of many factors to keep an eye on beyond the near-term.”

JLL's Seaports Outlook Report and Index expects that the Los Angeles and Long Beach ports will remain primary gateway ports into the United States. As a result, industrial occupancies are expected to remain strong.