The Port of Los Angeles has approved a $3.4 billion annual budget for fiscal 2026-2027, forecasting a 7% decline in container volumes to 9.3 million TEUs, according to FreightWaves.
The budget increase of $665 million over FY2025-2026 is driven largely by a 31% expansion for capital improvements. Projected operating revenues of $826 million represent a 26% year-over-year increase, with shipping services accounting for 65% of that. Operating expenses are projected to rise 6% to $452 million.
Budget and Volume Outlook
Port management cited continued volatility in global trade and uncertainty about trade policy as contributing factors to a more cautious cargo volume outlook. The Port of Los Angeles, along with neighboring Long Beach, comprises the busiest U.S. container gateway, according to FreightWaves.
| Fiscal Year | Forecast/Actual Volume (TEU) | Change vs Prior Year |
|---|---|---|
| 2026-2027 | 9.3 million (forecast) | -7% |
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.
China Trade Decline and Diversion
The San Pedro Bay complex has keenly felt the effects of the Trump administration’s trade war with China. Ongoing tariffs and other measures are pushing importers to increasingly seek alternative maritime routes into North America through Mexico and Canada, according to FreightWaves. China has also sought out new trade agreements in Africa and boosted business with Europe as it sustains its export economy.
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, per FreightWaves.
| Year | China Share of Containerized Imports at Port of LA |
|---|---|
| 2020 | 61% |
| 2025 | 53.4% |
| 2026 | ~40% |
Infrastructure Investments at 10-Year High
Capital improvement spending will set a 10-year mark, centering on container terminal modernization and transportation improvements. Construction has started on a $74 million rail expansion at Berths 302-305 and a $130 million SR 47/Vincent Thomas Bridge interchange reconfiguration, according to FreightWaves.
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., and a new cruise facility to replace and expand existing operations was announced earlier this year, according to FreightWaves.
Mayor and Port Leadership Statements
“The passage of this budget reflects the strength and forward-looking vision of the Port of Los Angeles,” 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.
Shipper and Operator Implications
The volume decline and trade diversion suggest shippers should monitor capacity at alternative gateways such as Mexican and Canadian ports. The budget's increased capital spending indicates the Port of Los Angeles is positioning for long-term competitiveness despite near-term volume headwinds. The $74 million rail expansion and Pier 500 project aim to improve efficiency for carriers and terminal operators, including Fenix Marine Services and MSC's LATiL.
Watch list: Pier 500 construction timeline, further trade policy shifts affecting China imports, and progress on the rail and bridge projects that could ease drayage congestion.
Sources:
