This week:

• Norfolk Southern Railway is terminating its intermodal services connecting Charleston and Savannah because of low cargo demand.
• The Biden Administration has unveiled a $20 billion initiative to bring back the making of ship-to-shore cranes in the US.
• January witnessed a significant 16% increase in Asian imports to the US.
• Oakland International Container Terminal introduces a third shift to tackle a backlog of nine vessels.
• The Georgia Ports Authority shortens the window for exports at Savannah. They have adjusted the earliest receiving dates from nine to seven days before vessel departure.

Norfolk Southern Adjusts Intermodal Services Amid Low Volumes

Norfolk Southern Railway will end its intermodal service from the ports of Charleston and Savannah to three Midwest destinations, including Chicago. The change will happen in mid-March and is due to persistently low cargo volumes. This strategic move was communicated to the port authorities of Georgia and South Carolina. It will also affect services to Cincinnati and Louisville, Kentucky. 

The change reflects a broader trend. Most imports for Chicago, Cincinnati, and Louisville have usually gone through the Port of New York and New Jersey or the Port of Virginia. CSX Transportation, NS’s Class I rival, still serves these cities from Charleston and Savannah. 

This change is significant for Georgia port officials. They had invested in the Mega Rail Terminal as part of the “Mid-America Arc” initiative. This initiative aimed to boost Savannah’s role as a competitive route to Chicago, but it did not succeed as expected.

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Biden Administration Invests $20 Billion to Revitalize US Port Crane Manufacturing Amid Cybersecurity Concerns

The Biden Administration has started a $20 billion initiative that aims to restart making ship-to-shore cranes in the US. This is due to concerns about cyber threats from cranes made in China.

The Administration’s effort is backed by both the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. It marks a revival of crane production in the United States although this sector hasn’t seen domestic activity for over three decades.

Surge in US Imports from Asia Signals Potential Trade Rebound

January experienced a significant boost in Asian imports to the US, marking a 16% escalation compared to the same period last year. This rise marked the fourth month of yearly growth. This increasing pattern indicates a potential resurgence of the eastbound trans-Pacific trade route, which had previously faced a downturn during 2023.

The import volume in January was 1.54 million TEUs, the second-highest since August 2022. Retailers are optimistic about imports through June, after depleting excessive inventories from the past two years.

However, the Lunar New Year holidays in Asia start are expected to cause a brief drop in US imports from Asia in late February and March. Despite this anticipated decrease, the import volumes during these months are projected to exceed those of the same period in 2023, which were notably low due to pandemic impacts and logistical challenges.

The outlook for the latter half of 2024 is uncertain. Factors like the security in the Red Sea and drought restrictions on the Panama Canal are adding complexity to trade forecasts.

Efforts to Alleviate Congestion at Oakland International Container Terminal

The Oakland International Container Terminal (OICT) handles over 70% of Oakland’s containers and is taking decisive action to clear a backlog of nine vessels in two weeks. It will do this by adding a third, overnight shift. The rare “hoot owl” shift, a term used on the West Coast for the 3 a.m. to 8 a.m. work period, has been activated for the first time in years to address the congestion issue.

Factors contributing to the current backlog include a weather-related electrical outage that impacted ship-to-shore cranes and reduced productivity on Super Bowl Sunday. Additionally, the congestion has been exacerbated by the arrival of super-post-Panamax ships, which require specialized cranes capable of handling containers stacked nine or 10 rows high.

Contrary to expectations, the backlog is not a result of a pre-Lunar New Year cargo surge, a common occurrence as factories in Asia temporarily cease operations for the holiday season. Other container terminals operated by SSA in Seattle and Long Beach are not as congested. With OICT handling a significantly higher volume of container ships weekly compared to Oakland’s other terminals, a two-week period is anticipated to normalize operations.

Also, the congestion at OICT has led to longer waits at terminal gates. This has sparked concerns among truckers about the efficiency of cargo movement. Despite the challenges, efforts to keep all three work shifts are under way. 

The Harbor Trucking Association (HTA) represents drayage operators in the region. It noted a slight drop in average turn times at OICT from December to January. This underscores the ongoing attempts to cut congestion and streamline terminal operations.

Adjustments in Savannah Port’s Export Timeline