US port report

US Port Report: Outlook Brightens With Strong Import Growth

US ports are experiencing a fast-rising tide of inbound volume. In the first two months of 2023, imports were up 14% year-over-year (YoY) at the nation’s top seaports.1 In this US port report, we will more closely examine the reasons why ports are humming with activity, what risks may create shipping and supply chain disruptions, and provide insights on how the rise in imports may impact intermodal shipping and freight rates.

The highest rates of growth are being recorded along the West Coast and the Port of Los Angeles is the nation’s top port. 2 In February, LA imports jumped a whopping 64% YoY and January imports were the highest ever recorded. 3, 4 Remarkably, in 11 of the first 12 weeks of 2024, total volume handled in LA was higher than last year. 5

The booming import figures are noteworthy, as total 2023 seaport volume was already better than the 2019 pre-pandemic annual volume record. After the wrenching gyrations experienced in recent years, it may be that imports are normalizing at a higher level. 6

So, will these strong import volumes mark an inflection point for intermodal, LTL and truckload freight rates? All that cargo must be transported, so certainly, volumes will increase. Yet, it’s too early to tell if freight rates will rise in tandem. Trucking capacity currently exceeds demand. However, a number of logistics professionals are optimistic a rebound in freight demand will arrive in the second-half of 2024.

Before diving into these topics, we want to remind you SSI provides exceptional multimodal freight audits. With a typical 8:1 ROI, our freight audit process delivers big savings month-after-month. Further, our custom-tailored process will meet your needs today and scale easily as your business needs evolve in the future.

WHAT ARE THE 10 LARGEST CONTAINER PORTS IN THE UNITED STATES?

First, are you curious which US ports handle the most container shipping volume (combined exports and imports)?

Here is a top 10 list for you. 7

  1. Los Angeles
  2. New York/New Jersey
  3. Long Beach
  4. Savannah
  5. Houston
  6. Virginia
  7. Seattle/Tacoma
  8. Charleston
  9. Oakland
  10. Miami

US PORT REPORT: VOLUMES ARE TRENDING UP

The import surge that kicked the year off is part of a larger trend. For six months in a row, the US has recorded higher YoY inbound container volumes. This is big news, as US port volume had declined YoY for the fifteen previous months. 8

In February, US container shipping imports far exceeded expectations, surging more than 23% YoY. 9

As mentioned, much of the influx is being recorded along the West Coast. According to Port of Los Angeles Executive Director, Gene Seroka, the robust volume reflects a combination of the strong U.S. economy, shippers replenishing depleted inventories, and the typical influx of cargo ahead of the Chinese Lunar New Year. 10

Across San Pedro Bay in Southern California sits the Port of Long Beach, where February inbound volume was up nearly 30% YoY. Port of Long Beach CEO Mario Cordero attributed the strong start of the year to “cooling inflation, rising consumer confidence and an ongoing effort to recapture market share”. 11, 12

Also, Seroka’s mention of the Chinese Lunar New Year is relevant. One reason February’s YoY growth was so robust is because the Lunar New Year celebration began February 10th, more than two weeks later than last year.

Traditionally, an “import cliff” is normal in the weeks immediately after the Lunar New Year. 13. So, it’s reasonable to expect that March imports will not be as stout as the previous months.

The East Coast has experienced an increase in imports as well. The Port of New York and New Jersey, handled more than 667,000 TEUs in January, up 3.4% YoY. Of note, that figure is more than 7% higher than the pre-pandemic volume in January, 2019.  14

At the Port of Savannah, after a modest January increase, total February container imports were up 19% YoY. In fact, Savannah’s total throughput (imports and exports) in February was higher than any month in 2023 and 2019. Experts believe Savannah’s growth will continue through March and may soar higher in the summer and fall.  15

Port Houston on the Gulf Coast also experienced a positive start, with January container imports increasing 3% YoY. Total container volume handled at the port was higher than any previous January on record. 16

A SUNNY FIRST-HALF FORECAST FROM GLOBAL PORT TRACKER

Global Port Tracker is a trusted resource produced for the National Retail Federation by Hackett Associates. Their recent report offers an optimistic forecast that the collective inbound cargo volume at the nation’s container ports will continue to see YoY increases each month throughout the first half of the year.

According to NRF Supply Chain and Customs Policy VP Jonathan Gold, “Retailers continue to work with their partners to mitigate the impact of disruptions from the Red Sea and Panama Canal restrictions.” While retailers have been impacted by cost and shipping delays, they are striving to minimize consumer impacts. 17

Overall, the NRF is forecasting TEU volume will be up 5.3% in the first half of 2024 compared to the same period last year. 18

Another positive viewpoint comes from Rolf Habben Jansen, the CEO of Hapag-Lloyd. In a recent interview with CNBC, Jansen shared he is optimistic a strong peak season will occur from June through August in North America. Further, his outlook for the second-half of the year has brightened as rates are currently elevated by 75% to 150% on key routes compared to last year. 19

US PORT REPORT: YET, SOME CLOUDS ARE ON THE HORIZON

As the NRF pointed out, geopolitical uncertainties continue to pose some risk of shipping disruptions this year. In particular, the conflict in the Red Sea and the inability of carriers to access the Suez Canal is impacting global supply chains.

Add to that that ongoing drought in Central America and one might expect that the constrained traffic via the Panama and Suez canals would have created severe supply chain disruptions. But aside from inconvenient delays, that is not the case.

Already, most ports and supply chain managers have adjusted to the longer transit times. Some shippers have shifted to air cargo, which has plenty of capacity available. Others are shifting from East Coast to West Coast trade lanes, per the Port of Long Beach CEO, Mario Cordero. 20

At the moment, there is ample container-shipping capacity. Many carriers will have new, larger ships placed into service in the months and years ahead. In light of that, most shippers would expect carriers to be eager to sign new contracts to secure volume. But that isn’t happening yet, because spot rates are running higher than a year ago. Carriers are feeling bullish about increasing contract rates.

Typically, transpacific contract rates are negotiated at the annual TPM conference in Long Beach each spring. But this year’s event was different. Shippers reported rate increases proposed by the carriers were “excessive”. Deals were left undone. For now, both shippers and carriers are postponing new agreements in hopes of securing a better deal. 21

ALSO, LABOR UNCERTAINTY MAY CREATE SHIPPING DISRUPTIONS

East Coast and Gulf Coast ports are under the threat of a strike by the International Longshoremen’s Association, which represents 45,000 workers at ports from Texas to Maine. Their union says the workers will walk out if a contract is not finalized by October. The union hopes to achieve the same big gains that West Coast longshoremen won last year. 22

Experts believe an agreement will be reached and the risk of a strike is low. Yet, with uncertainty hanging in the air, logistics companies are confirming reports that some shippers are diverting more volume to the West Coast. 23

If the trend continues and a multitude of shippers switch to the West Coast, there is a risk that the ports will be overwhelmed by volume. That seems unlikely – unless the strike actually happens.

However, this labor uncertainty is one reason why carriers are feeling confident about extracting higher rates for the transpacific trade lanes this year.

HOW WILL IMPORT GROWTH IMPACT INTERMODAL FREIGHT?

The recent surge in imports will surely boost demand for intermodal transportation. As recently reported in Logistics Management, January intermodal volumes were up 5.5% annually. In fact, positive annual growth occurred in each of the past three months.

Joni Casey, the President & CEO Intermodal Association of North America (IANA) is expressing optimism for the year ahead. In the article, Casey said, “anticipated growth in manufacturing and consumer spending and a predicted return to JIT [just-in-time] inventory replenishment should benefit intermodal, as more and consistent import volumes will keep traffic in the ‘pipeline.’” 24

In January, ACT Research published their Freight Forecast. Per Tim Denoyer, the company’s VP and Senior Analyst, “Changing ocean and inventory dynamics support an upturn in freight demand, particularly intermodal, where we raise our rate forecasts this month.” 25

The labor uncertainty along the East & Gulf coasts is likely to create an early peak season for freight transport companies in the US, as shippers order goods early to mitigate the October strike risk. Further, if a significant amount of container volume is diverted to the West Coast, that will benefit overland freight simply because more goods will need to be transported across the country. 26

Per a recently published Logistics Managers’ Index (LMI), transportation demand is expected to rise. However, the same is true for capacity as new trucks and trailers are added to fleets. This suggests the US has not yet entered a true growth period in the freight market. However, many logistics professionals who participated in the recent LMI survey are predicting a rebound will come sometime this year. 27

Separately, Derek Leathers, the CEO & Chairman of trucking giant Werner, shared his insights during a recent quarterly earning call. He expects Q2 spot rates to improve. Further, Leathers declared, “A more balanced supply and demand environment in the second half will benefit us as we lock in more contractual freight at improving rates.” 28

ABOUT SSI

SSI, a trailblazer in the freight audit marketplace, was founded in 1989 as Software Solutions Unlimited, Inc. We are a leading provider of global, multimodal freight audits and international freight payment services.

When you choose SSI, you are selecting a freight audit company with uncommon know-how. Our experience is virtually incomparable, as we have audited hundreds of millions of freight and parcel invoices since our inception.

Contact us to learn more about the many ways in which our team can save you money and help you succeed.

Footnotes:
1. Jeff Berman, “February and year-to-date U.S. import volume is solid, reports S&P Global Market Intelligence“. March 25, 2024, as published by Supply Chain Management Review.
2, 8, 11. Joe Antoshak, “West Coast leads latest surge in US container imports”. February 22, 2024, as published by FreightWaves.
3, 12, 20. Mike Wackett, “Ports of LA and Long Beach busier this year and eyeing an early peak season”. March 19, 2024, as published by The Loadstar.
4. Tony Mulvey, “Port of Los Angeles shines in January”. February 15, 2024. as published by FreightWaves.
5. Dashboards, “Port Optimizer” as well as “Port of Los Angeles February Cargo Volume Jumps 60% Over Previous Year”. March 18, 2024, as published by The Port of Los Angeles.
6. Alejandra Salgado and Edwin Lopez, “US ports by volume: How maritime cargo trends are stacking up”. Updated March 11, 2024, as published by Supply Chain Dive.
7. Zahra Ahmed, “The 10 Largest And Busiest Container Ports In The United States”. May 4, 2023, as published by Marine Insight.
9, 13. Joe Antoshak. “US container imports robust in February; inbound volume forecast dicier”. March 12, 2024, as published by FreightWaves.
10. Dan Ronan, “Higher Container Volumes Signal Strong Start to New Year”. February 29, 2024, as published by Transport Topics.
14. Tony Mulvey, “Restocking boosts January US port activity”. March 1, 2024, as published by FreightWaves.
15. John Paul Hampstead, “Freight volumes build at the Port of Savannah”. March 6, 2023, as published by FreightWaves.
16. MLP staff, “Port Houston Reports Record January Container Volumes”. February 28, 2024, as published by Maritime Logistics Professional.
17. Jeff Berman. “Port Tracker report presents a positive outlook for first half U.S.-bound import numbers”. March 8, 2024, as published by Logistics Management.
18. J. Craig Shearman, “Import Cargo Continuing to Rise Despite Red Sea Disruptions”. February 9, 2024, as published the National Retail Federation.
19. Lori Ann LaRocco, “CEO of Hapag-Lloyd, one of world’s top ocean shippers, says the outlook has changed for the global economy”. March 15, 2024, as published by CNBC.
21. Mike Wackett, “Transpacific freight rates – it’s all about ‘who blinks first’”. March 15, 2024, as published by The Loadstar.
22. Paul Berger, “East Coast, Gulf Coast Dockworker Talks Are Starting Under Threat of a Strike”. March 11, 2024, as published by The Wall Street Journal.
23, 26. Lori Ann LaRocco, “Strikes at East Coast, Gulf ports are a big labor risk this year, and trade diversions have already started”. March 7, 2024, as published by CNBC.
24. Jeff Berman, “January intermodal volume heads up for the third consecutive month, reports IANA”. February 27, 2024, as published by Logistics Management.
25. DC Velocity Staff, “U.S. freight sector set for rebound in 2024, ACT Research says”. January 18, 2024, as published by DC Velocity.
27. Zac Rogers, PhD, “February 2024 Logistics Manager’s Index Report”. March 5, 2023, as published by the Logistics Managers’ Index.
28. David Taube, “Trucking Executives point to potential for 2024 market recovery”. February 12, 2024, as published by Trucking Dive.

SSI blog post entitled: US Port Report: Outlook Brightens with Strong Import Growth.