This week:

• U.S. Gulf Coast ports are successfully navigating the downturn in container imports through specialized equipment imports and raw material exports.
• On the India-U.S. trade lane, carrier rates have dropped significantly since the end of September.
• The shipping industry’s decarbonization efforts were a focal point at the Global Maritime Forum’s summit in Athens.
• J. B. Hunt Transportation said it thinks that the intermodal market might be nearing the end of its freight recession.
• In an op-ed for the Journal of Commerce, analyst Lars Jensen wrote about how geopolitical stress and conflicts — or potential conflicts — can affect the supply chain.

Specialized Equipment Imports, Raw Material Exports Help Gulf Coast Ports

U.S. Gulf Coast ports are successfully navigating the downturn in container imports due to steady exports of raw materials and the continuous flow of specialized equipment imports.

Volumes in and out of the Gulf Coast dropped 0.4% year over year in the first eight months of 2023, compared to the combined volumes through the East and West Coasts falling 15% in the same period, according to data from PIERS and reporting from the Journal of Commerce.

In 2023, Gulf Coast petrochemical manufacturers have seen heavy overseas demand for U.S.-produced plastics, leading to a boom in resins exports. 

The Gulf Coast ports have also seen an increase in imports of specialized machinery for the energy industry, as well as imports for automotive and electronics manufacturing, as Tesla plans to expand its Gigafactory in Austin and Samsung is building a chip factory in Tyler, Texas.

Port Houston Authority Executive Director Roger Guenther told the Journal of Commerce that activity at the port has been vibrant.

“Distribution is growing tremendously in and around the port,” Guenther said. “We have a huge population with huge consumer demand, so more cargo from Asia is shifting here.” 

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India-U.S. Carrier Rates Drop In October

Norfolk Southern Railway announced in early October that it would accept more ocean containers at its Midwest terminals for loads traveling to the West Coast.

The railroad, which is prominent throughout the eastern side of the U.S., is now taking on ocean containers traveling west at Cincinnati, Cleveland, Detroit and Louisville, whenever those terminals are open.

The operational shift from Norfolk Southern Railway is seen as a move to increase its commitment to shippers.

Upcoming Emissions Reduction Targets Loom Large At Athens Summit

The shipping industry’s decarbonization efforts and how they can be accomplished was a focal point at the Global Maritime Forum’s summit in Athens in mid-October.

By 2030, the International Maritime Organization’s greenhouse gas emissions strategy aims to reduce the carbon intensity of international shipping by an average of 40%. Part of that goal hinges on having zero or near-zero emission “technologies, fuels and/or energy sources” represent at least 5% of the energy used in international shipping by 2030.

At the summit, Katharine Palmer, global head of sustainability at Lloyd’s Register, said that more “real-world action” is needed to achieve that 2030 goal

“Companies are ordering zero-emission vessels but that is not enough to achieve the 5% by 2030,” Palmer told the media. “It’s really about real-world action between the supply and demand actors coming together to make this happen, and the longer we leave that, the harder it is going to be and the more disruptive.”

The Global Maritime Forum released a report stating that the zero-emission fuel production already underway would likely only cover half the goal, but that projection could quickly rise if the right decisions are made.

“If more projects are successful, zero-emission fuel production could be up to twice as much as is needed, even when accounting for other sectors’ fuel needs,” according to the report.

J. B. Hunt Says End Of Freight Recession Could Be Near

During an earnings call this month, J. B. Hunt Transportation said that the intermodal market might be nearing the end of its freight recession.

On the call, Shelley Simpson, president of J. B. Hunt, said that the company feels like it’s “coming out” of the turbulent period for freight. 

“We are not at a point yet to say we’re out of the freight recession, but we do feel like we’re coming out of it, or, said differently, directionally we are seeing signs of things moving in a positive direction,” Simpson said during the call on Oct. 17. “We can talk about a freight recession, but we’re not experts on what’s going to happen in the economy. Our customers aren’t negative, I would say they are neutral to positive. But I don’t know that anybody here is an expert as to what’s going to happen from an overall freight demand perspective.”

J. B. Hunt claims it had a 1% increase in volume year over year in the third quarter after previously having three down quarters.

Analyst Says Geopolitical Stress Back on Supply Chain

U.S. imports are expected to decrease in volume, as retailers are stocked for the holiday season, according to the latest forecast in the Global Port Tracker.

The new monthly report from the National Retail Federation and Hackett Associates shows October imports declining 3.1% year over year, after there was a 0.1% year over year gain last month. November imports are projected to increase 7.5% from November 2022, but that is down from an earlier 10.4% projected increase.

Jonathan Gold, vice president for supply chain and customs policy at the NRF, said in the report that retailers stocked up for the holidays early this year.

“Cargo volumes will be strong the rest of the year, but not as high as we expected a month ago,” Gold said.

Since the beginning of the year, actual containerized imports from Asia have fallen 21.2% year over year.

“We are already seeing this in the operational decisions carriers are making,” Ben Hackett, founder of Hackett Associates, said. “They have slowed down their ships in an attempt to cut capacity without having to take vessels out of service as new, larger ones ordered when demand was higher are delivered. Even so, ships are not sailing fully loaded and freight rates are declining as a result.”