This week:

• Asia-USA imports move towards the US West Coast ports as security problems in the Suez Canal and levies in the Panama Canal increase Coastal price differences 
• Jacksonville and surrounding port areas see continued growth, mirrored by growing volumes 
• Retailers predict a strong retail and import season for the start of 2024 after a successful Black Friday 
• US ports urge Congress to pass new legislation that will release funding for needed improvement projects 
• Port of Los Angeles takes first step in construction of a new 80-acre chassis and container yard 

Imports from Asia Shifted 5.3% Towards West Coast Following Long-Expected Trend

West Coast ports gained a 5.3% share in the Asia import market between October and November, mainly due to increasing surcharges on the Panama Canal. The Panama Canal drought restriction surcharges could increase the price of FEUs by hundreds of dollars depending on levying by carriers, with spot rates for the week ending December 9 averaging $2,475/FEU to the East Coast and $1,687 to the West. After the price spread rose $288 since November 3, additional increases would incentivize shippers and forwarders to continue away from the East Coast. 

The shift towards the West Coast is heightened by security threats near and in the Suez Canal, as well as current East Coast labor contract negotiations. Due to the timing of this shift, booms in import volume in anticipation of Lunar New Year factory closures across Asia will likely be more noticeable across West Coast ports.

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Jacksonville’s Port Area Hits Record-High Industrial Warehouse Leasing Numbers

The third quarter of this year saw the port areas around Jacksonville absorb 3.7 million square feet of warehousing space, equaling 82% of Jacksonville’s entire industrial market absorption for all of 2022. Jacksonville and other Gulf and East Coast port areas have seen continued expansion thanks to growth in population, investment, and the previous years’ movement away from the West Coast. 

Amazon and other large retailers like Dollar General have added millions of additional warehousing space over the last five years, with another 4.7 million square feet currently under construction. But even with a substantial amount of new storage space, including refrigerated storage units, developers are saying that the area may still struggle to meet the demands of new customers in a growing locale. While the national vacancy rate for November averaged 4.6%, Jacksonville’s sat at 4.3%. Jacksonville’s vacancy rate has sat under 5% even before the pandemic. 

As a result, SSA Marine has invested $72 million to modernize the Blout Island SSA Jacksonville Container Terminal, which, when completed, will bring the container terminal’s TEU capacity close to 500,000 annually, a 150% increase.

Retailers Expect High Holiday Retail Sales and Early 2024 Import Volumes

Despite a mix of different economic signals, US retailers are ordering more in preparation for the start of 2024 after a successful Black Friday season. Import forecasts for the beginning of 2024 predict record holiday sales that could reach 11.4% higher than those in December 2022, up from Global Port Tracker’s original 6.6% increase made just last month. The National Retail Federation (NRF) expects January imports to increase by 6.6% year-over-year, up from the previous prediction of 3.7%. 

NRF forecasts also predict retail sales for the coming record-setting holiday season will total between $957.3 billion and $966.6 billion. This data marks a 3-4% year-over-year increase. As shopping habits continue to normalize over the coming months, the NRF year-over-year predictions show increases in February and March of 14.5% and 7.7%, respectively.

Ports Throughout the US Urge Congress to Pass Legislation for Valuable Growth Projects

Ports nationwide are urging Congress to pass new legislation for funding from the Water Resources Development Act (WRDA). The act was created to allocate funds to US ports for port maintenance and various navigational projects, but the next revision has no set dates, with the last passing back in December 2022. 

The Port of Tampa is one proponent urging for a revision quickly as the port holds off on a $1 billion channel deepening to allow ultra-large container vessels into the port. Previous versions have gone 5 to 7 years between each revision, leaving many port authorities anxious when faced with the challenges of remaining competitive and resilient in the future.

Port of Los Angeles to Construct a New 80-acre Near-Dock Chassis and Container Yard

The Port of Los Angeles has undertaken the first step in creating the Terminal Island Maritime Support Facility (MSF), releasing an initial study/notice of preparation as part of its environmental review process. The MSF will provide an additional 80 acres for temporary empty container storage, chassis storage, repair and maintenance, and servicing the port’s six container terminals. 

While currently not in use, the land for the new construction was used through the pandemic as a temporary container storage space, holding 7,000 containers at its maximum capacity in 2022. The new project will help prevent severe port congestion in the future like that seen over the pandemic and subsequent supply chain bottlenecks.