May U.S. Import Container Volumes Increase and Continue Tracking 2019 Performance

In May 2023, U.S. container import volumes increased over April 2023 due to a rise in imports from China and Vietnam; May volumes also kept pace with pre-pandemic 2019 volumes. Port transit times increased, returning to early 2023 levels. The West Coast labor situation appears to be turning sour as recent job actions begin to impact container processing. The June update of the logistics metrics Descartes is tracking shows continued consistency with pre-pandemic import volume seasonality and signs that key challenges to global supply chain performance in 2023, such as West Coast labor relations and port transit time delays, are still not sorted out.

U.S. container imports continue to follow 2019 trend.

May 2023 U.S. container import volumes increased 3.8% from April 2023 to 2,097,313 Twenty-foot Equivalent Units (TEUs) (see Figure 1). Versus May 2022, TEU volume was down 20.0%, but up 0.5% from pre-pandemic May 2019. As with the first four months of 2023, the growth in import volume in May continued to track to 2019 volumes with a difference of 1.3% for the same period in each year.

Examining the increase in import volumes from March to April in the previous six years, April 2023 volumes show a representative increase from March of the same year.

For the top 10 ports, overall U.S. container import volume in May 2023 was up by 68,742 TEUs versus April (see Figure 3). The Port of Los Angeles showed the greatest overall container volume increase (56,226 TEUs) and the Port of Tacoma had the greatest percentage increase at 33.3%.

Chinese imports in May 2023 increased for a second month, climbing 5.1% over April 2023 to 780,684 TEUs, but still down 22.2% from the August 2022 high. China represented 37.2% of the total U.S. container imports in May, an increase of 0.4% from April, but still down 4.3% from the high of 41.5% in February 2022.

For the top 10 countries of origin, U.S. container import volume in May 2023 increased 3.8% (54,423 TEUs) with China having the greatest overall increase (37,991 TEUs) and Vietnam having the greatest percentage increase at 13.6%. Japan had the largest decrease (-14.3%), which can largely be attributed to the Golden Week holiday during the first five days of May.

Top West Coast ports continue to take market share.

In May 2023, the volume share at top West Coast ports grew again but shrank at top East and Gulf ports. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in May 2023 versus April 2023 shows that, of the total import container volume, top West Coast ports increased to 41.5% (up 1.3%) and top East and Gulf Coast ports decreased to 42.8% (down 1.2%). Compared to smaller ports, the top 10 ports share in May 2023 remained stable at 84.3% which was the same number in April 2023.

May port transit delays reverse course and extend for top ports.

In May 2023, overall port transit delays were much longer when compared to April 2023 and, overall, similar to end of 2022 and first quarter of 2023 delays.

West Coast port labor negotiations slowly making progress, but union job actions affecting container processing.

The International Longshore and Warehouse Union (ILWU) and Pacific Maritime Association contract negotiations continue. The two groups say that significant progress has been made, but there is still major disagreement on several issues (that were not specified). However, there have been job actions by the ILWU that are now impacting container processing. Despite progress on the agreement, the recent job actions could further delay the return to West Coast ports of Asia-originating containers that had shifted to Gulf and East Coast ports.

According to the U.S. Energy Information Administration, gasoline costs, a significant contributor to high inflation rates, remained stable at $3.57/gallon to $3.60/gallon in May 2023, but were down $1.53/gallon from May 2022. Diesel costs were also down slightly to $3.86/gallon this month and down $1.68/gallon from May 2022. The continued diesel decline is good news, but both are likely to remain elevated for the foreseeable future given the disruption of global energy markets because of the war in Ukraine and subsequent sanctions on Russia.

Managing supply chain risk: what to watch in 2023.

U.S. container import volume increased in May and continues to track to 2019 numbers and there are positive signs that point to less supply chain turbulence. 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. May U.S. container import volume continues to follow 2019 levels that are significantly below this range.
• 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. May port wait times increased, returning to higher levels at all ports.
• 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. COVID is still with us but having less impact on supply chain and logistics resources and supply chain performance variability.
• ILWU contract negotiations. The ILWU contract has expired, but to date there hasn’t been an impact on West Coast port operations; however, California AB5 has the potential to cause more disruptions to California port operations. There is some progress, but no agreement specifics and the union has stepped up job actions impacting port performance.
• Inflation and the Russia/Ukraine conflict. Inflation may be the only way to slow down the strong U.S. economy and ultimately help to alleviate the global logistics capacity-related problems that exist. The latest Consumer Price Index report available (April 2023) shows a continuing decline in inflation, but it is still high. Diesel prices continue to decline and gas prices have stabilized yet both remain elevated because of the Russia/Ukraine conflict.

Consider recommendations to help minimize global shipping challenges.

May 2023 U.S. container import volumes continue the April 2023 increase and continue to align with pre-pandemic 2019 numbers. With continued volume increases since February, West, East and Gulf Coast ports saw port transit times increase significantly. Still, unresolved labor-related issues are keeping importers from moving volume back to the West Coast. This data reaffirms that the pressure on supply chains and logistics operations is continuing to lift, but there are still issues that can cause further 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. We are staying the course with our current perspectives and recommendations:

Short-term:

• Monitor the impact of California law AB5 on owner-operators serving California ports for potential disruption or degradation of port container processing performance.
• Monitor ILWU contract negotiations for progress.
• 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.
• Evaluate the impact of inflation and the Russia/Ukraine conflict 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.

Near-term:

• Continue to look at alternate transportation lanes, including smaller ports, to improve supply chain velocity and resiliency. Total transit time is important, but so is supply chain predictability. Evaluate alternative transportation lanes into the U.S., including entry through northern and southern borders and inland 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