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West Coast Ports Ready for Next Surge, Effects of Suez Canal Diversions, and More

This week:

  • West Coast ports and container terminals see a return to pre-covid container volumes as they process the pre-Lunar New Year rush 
  • US container import flows show changes as US shippers order more from Vietnam, India, and other countries 
  • Delays and problems for Indian shippers exporting to the US as Suez Canal complications reduce space availability and increase lead times 
  • Port of NY-NJ reports no port congestion, just delays, due to Suez Canal situation 
  • The Chinese share of US ocean containerized imports fell below 40% last year, the first time since 2013 

Terminals at LA-LB and Along West Coast Return to Pre-Covid Container Volumes

Although terminals at the Ports of Los Angeles and Long Beach (LA-LB) are working through the pre-Lunar New Year surge, the flow of container traffic this season has returned to those seen in 2018 and 2019. The return to more regular traffic without container ships anchored in the bay contrasts sharply with January 2022, when a peak of 109 vessels sat at anchor.

Data from SSA Containers reported that Los Angeles-Long Beach is operating at 70% capacity utilization this season, with other ports such as Oakland and Seattle-Tacoma operating at 60%. After last year, when many retailers shifted to the East and Gulf Coasts to avoid delays from labor contract negotiations, many West Coast ports are now prepared for a shift back without serious congestion issues this year.

A shift back to the West may be possible if situations ease in the Panama and Suez canals.

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Changing Trends in US Container Import Flows

US containerized imports from China have been steadily falling since 2018 as shippers work to source essential goods from a wider array of sources, such as India and Vietnam, and through an increase in nearshoring. In 2018, 47% of US containerized imports were from China, falling to 40.7% in 2022 and 39.6% last year.

While the US’s second-largest source of container volumes, Vietnam, didn’t see any change in its export volumes to the US between 2022 and 2023, holding out at 8.7%, volumes have risen considerably from 2013’s 3.3%. Imports from India last year made up 4.1% of total US imports from 3.9%, showing a slow but gradual increase after reaching the 3% mark in 2018.

In the five years before the pandemic, US import volumes experienced an average 4.5% annual growth in container volumes. However, growth projections for this year remain modest as many retailers and shippers continue to move away from China’s production power in favor of more resilient supply chains.

Low Vessel Capacity from Red Sea Crisis Hits India-US Cargo Movement

The current shipping crisis in the Red Sea is taking a toll on Indian shippers and forwarders. A reported 25% of scheduled US East Coast-bound loads from Nhava Sheva and Mundra ports are not being honored. Space constraints on this trade lane, reduced sailings, and unsettled schedules are linked to delays caused by the shipping crisis in the Red Sea.

Due to carriers making longer voyages to avoid vessel attacks in the Red Sea, recent imports to the US from India have been delayed by between 10 and 15 days. Rates from India to the US East Coast have also risen sharply, reaching $4,700/FEU on January 30 from just $3,000/FEU one month prior. Hapag-Lloyd has also announced a $1,000 hike in its container prices that will come in on March 1.

Suez Canal Diversions Cause Delays but No Congestion at NY-NJ

With approximately 45% of its typical inbound cargo moving through the Suez Canal and some of this volume also passing through the Panama Canal, the Port of New York and New Jersey has reported that no severe congestion has affected the port. Instead, shippers have been advised to add an additional two weeks to shipment lead times on imports from Asia arriving at the port due to container vessels rerouting around southern Africa.

The Port Authority of New York and New Jersey (PANYNJ) still expects the port to see regular cargo volumes this year with a projected 3% growth, but the effects of the Suez and Panama Canals may still impact the port.

Chinese Share in US Imports Dropped Under 40% Last Year

For the first time in over a decade, the share of US containerized ocean imports from China fell below the 40% mark last year as shippers look to source elsewhere. The 9.6 million TEUs from China last year accounted for 39.6% of the US market.

While there is more than one reason why many US retailers and shippers are moving away from Chinese sources, one of the core reasons focuses on trying to prevent the severe supply chain bottlenecks and backlogs seen over the pandemic from happening again to the same extent. Moving the US import market to countries such as India, Vietnam, South Korea, and Germany is a bid to reduce US reliance on a single source for improved resiliency.

Tension between the US and China has also led many US importers to reduce how much they order from Taiwan should a conflict occur between China, Taiwan, and the US. Taiwan made up 2.5% of US imports last year, compared with 2.9% in 2021.

In total, US imports last year dropped 12.9% from 2022 to approximately 24.2 million TEUs.

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