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Descartes: November U.S. Container Import Volumes Down 9% from October; Panama Drought Impacting East and Gulf Coast Ports

In November 2023, U.S. container import volume decreased from October 2023, with East and Gulf Coast ports experiencing the greatest declines. While the decrease is large, it’s consistent with reductions seen in the last months of prior years. Imports from China also continued to decline, but at a slightly faster pace than the overall numbers. The Panama drought finally appears to be negatively impacting U.S. container import volume at East and Gulf Coast ports, which could worsen with the Panama Canal Authority’s plans to further reduce the number of daily transit slots in coming months. The December update of the logistics metrics Descartes is tracking shows a decline consistent with seasonal import patterns and signs that global supply chain performance improvements have stalled.

U.S. container imports decelerate.

November 2023 U.S. container import volumes decreased 9.0% from October 2023 to 2,099,408 twenty-foot equivalent units (TEUs) (see Figure 1). Versus November 2022, TEU volume was higher by 7.4%, and up 10.4% from pre-pandemic November 2019. The growth in import volume over the first eleven months of 2023 is within 4.0% of the same period in 2019.

In the previous six years, import volume decreased from October to November as it is one day shorter and includes the U.S. Thanksgiving holiday. November 2023 import volume maintained this trend with a 9% decrease from October, but in line with the post-peak season reductions in other years.

For the top 10 ports, overall U.S. container import volume in November 2023 was down 182,278 TEUs versus October (see Figure 3) with nine of the ten ports showing decreases. The Port of Los Angeles (12,212 TEUs) experienced the only container volume increase, while the Ports of New York/New Jersey (-62,062 TEUs) and Houston (-46,857 TEUs) had the greatest decreases.

Chinese imports in November 2023 decreased by 11.7% over October 2023 to 783,467 TEUs, but they were still down 21.9% from the August 2022 high (see Figure 4). China represented 37.3% of the total U.S. container imports in October, a decrease of 1.1% from October and down 4.2% from the high of 41.5% in February 2022.

For the top 10 countries of origin (CoO), U.S. container import volume in November 2023 decreased 9.3% (-155,571 TEUs) from the previous month, with China having the greatest volume decrease (-103,376 TEUs) and Italy (424 TEUs) having the only, albeit negligible, volume increase.

Top West Coast ports regain market share over top East and Gulf Coast ports.

In November 2023, the volume share at top West Coast ports increased based upon the significant volume decrease at top East and Gulf Coast ports. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in November 2023 versus October 2023 shows that, of the total import container volume, top West ports increased to 43.1% (up 3.5%) and top East and Gulf Coast ports decreased to 42.0% (down 3.1%). Compared to smaller ports, the top 10 ports’ share in November 2023 increased to 85.1%, up slightly (0.3%) versus October 2023.

November port transit delays remain stable for most top ports.

Overall port transit delays in November 2023 were mixed (see Figure 7). The top West Coast ports saw two ports with slight decreases, two ports with slight increases and one remained the same while the top East and Gulf ports had three with slight increases, one with a slight decrease and one remained the same.

The drought in Panama finally appears to be impacting U.S. container import volumes.

Panama’s drought continues to worsen and the Panama Canal Authority plans to reduce the number of ships passing daily over the coming months in anticipation of the dry season. November was the first month where the drought appears to be impacting Gulf Coast container import volumes (see Figure 8). While overall volume was down 9.0%, the port of Houston was down 26.7%. Top East Coast port volume is also down significantly (Baltimore: -21.1%, Charleston: -18.7%, New York/New Jersey:

-16.1% and Norfolk: -14.1%). However, port transit times are only up slightly and not across all top East and Gulf Coast ports. Transit time changes from October to November for top Gulf Coast ports were also mixed (Houston (+0.5 days), Mobile (-0.2 days), Tampa (-1.1 days) and New Orleans (-0.3 days)) in October.

A potential labor disruption at South Atlantic and Gulf Coast ports in 2024.

The agreement between the International Longshoreman’s Association (ILA) and United States Maritime Alliance (USMX) is set to expire at the end of September 2024. A labor action would disrupt operations at South Atlantic and Gulf Coast ports and ILA leadership has stated that it will not extend the current agreement and told members to prepare for the possibility of a coast-wide strike in October 2024. Currently, there are no statements of progress from either organization.
Managing supply chain risk: what to watch at the end of 2023.

U.S. container import volume decreased in November, but continued to surpass 2019 numbers. There are some signs that point to less supply chain turbulence, but there are other signs such as the Panama drought that point to further disruptions. Here’s what Descartes will be watching to see if global supply chain performance will continue to improve:

  • Monthly TEU volumes between 2.4M and 2.6M. This level will continue to stress ports and inland logistics until infrastructure can be enhanced. November U.S. container import volumes declined to 2.1M TEUs, which puts less pressure on ports.
  • Port transit wait times. If they decrease, it’s an indication of improved global supply chain efficiencies capabilities or that the demand for goods and logistics services is declining. November port transit time performance remained relatively stable.
  • Continuing impact of the pandemic. The spread of COVID subvariants continues to add uncertainty to the trajectory of the pandemic and impact supply chains in unpredictable ways as different countries are affected at different times and for different durations. A new variant of COVID is causing infection rates to rise, which has not yet impacted supply chains and logistics resources but needs to be watched throughout the remainder of the year.
  • The economy. The U.S. is an import-driven economy, so economic health is an important indicator of container import volumes. However, there are many indicators that continue to provide conflicting stories. As of December 1st, the Federal Reserve borrowing rate remained at 5.3% to slow inflation which has dropped to 3.2% (as of November 2023). Yet, consumers continue to spend as the inflation adjusted personal consumption expenditures of durable goods continues to rise with October 2023 figures (latest available) being the highest again in the last two years.
  • Panama Canal-based trade flow. The combination of the drought impacting capacity and the recently ratified International Longshore and Warehouse Union (ILWU) could accelerate the redirection of the one million TEUs that shifted from the West Coast ports during the pandemic. Container volume in November at top East and Gulf Coast ports was down significantly compared to the overall volume reduction, but port transit times only increased very slightly.
  • ILA/USMX contract negotiation. A potential strike on the South Atlantic and Gulf Coasts could disrupt U.S. container imports later in 2024. Given the current Panama Canal situation, shifting volume to West Coast ports could be extremely challenging or significantly extend transit times. Posturing has started in November, but no progress has been cited.

Consider recommendations to help minimize global shipping challenges.

November 2023 U.S. container import volumes were down significantly versus October 2023, but were higher than November 2022 or 2019 numbers. Port transit times in November were consistent with October numbers. This data reaffirms that while the pressure on supply chains and logistics operations is lower, there are still issues causing disruptions. Descartes will continue to highlight key Descartes Datamyne, U.S. government and industry data in the coming months to provide insight into global shipping. Recommendation changes from previous Descartes Global Shipping Reports are in bold.

Short-term:

  • Track the spread of COVID variants to determine when they will hit critical parts of the supply chain, especially in China.
  • Track ocean shipments and carrier performance as there is still a considerable gap between original ETAs and actual ones.
  • Track the Panama Canal situation as the drought may impact shipping capacity and timeliness and even cause rerouting of supply chains.
  • Evaluate the impact of inflation and the Russia/Ukraine and Israel/Hamas conflicts on logistics costs and capacity constraints. Ensure that key trading partners are not on sanctions lists.
  • Focus on keeping the supply chain resources you have, especially drivers. The old adage “a bird in the hand is worth more than two in the bush” definitely applies here. Building trips to reduce stress and improve quality of life to retain drivers is now as or more important than wage increases.
  • Evaluate the potential impact of an ILA strike in October 2024 on South Atlantic and Gulf Coast ports to determine alternate ports or trade lanes.

Near-term:

  • For companies importing from Asia, reevaluate trade that was moved away from West Coast ports.

Long-term:

  • Evaluate supplier and factory location density to mitigate reliance on over-taxed trade lanes and regions of the globe that have the potential for conflict. Density creates economy of scale but also risk, and the pandemic and subsequent logistics capacity crisis highlights the downside. Conflicts do not happen “overnight” so now is the time to address this potentially business disrupting issue.
    Source: Descartes Datamyne

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