A Shift in Import Flows Puts the Spotlight on the East Coast
August and September marked the best month ever for East and Gulf coast ports. While import demand remains near all-time highs, many Asian exporters have shifted their focus to East and Gulf coast ports due to potential labor strife as well as unprecedented congestion on the West coast.
According to American Shipper:
“The West Coast ports’ share of the total sank to 45%. That’s a nine-point swing from February 2021, when the West Coast boasted a 54% share. According to John McCown, author of the Container Volume Observer, August marked the West Coast ports’ lowest share of U.S. imports “since at least the early 1980s.”
This shift has marked record volumes for the East/Gulf coasts, which begs the question if these ports can handle the shift in demand. Norfolk Southern cargo rail is struggling to handle the new volumes pouring containers into Kansas City and Memphis. As a result, the Class I railway announced it was opening two new auxiliary container areas to accommodate. On the vessel side of things, well over a dozen ships have been waiting for berth space outside of New York and New Jersey. In contrast, the number of container ships waiting off the port of Los Angeles and Long Beach was in single digits as of last month.
Here are some key statistics surrounding the shift in demand:
- The Ports of New York and New Jersey moved 843,191 TEUs in August, the busiest August on record
- Import gains were driven by Savannah (up 20%), Norfolk (up 11%), Houston (up 13%), and NY/NJ (up 11%).
- Imports to the top West Coast ports totaled 978,844 TEUs in August, down 11.5% year over year. Port of Los Angeles attributed largely to this decline by dropping 17% in import volumes.
- The Port of Los Angeles now ranks third in the nation behind the Ports of New York and the Port of New Jersey
Some experts are anticipating volume to dwindle into 2023 allowing East/Gulf coast ports to adjust and improve their infrastructure, which is impacting not just the ports but warehouses, trucking, and railroads. Regardless, importers are on high-alert whether labor tensions will impact the West coast and are rerouting accordingly.
Source: McCown Container Volume Observer
Some positive news out of this development has caused short- and long-term rates to U.S. ports from China to drop. The new import flow has decreased the demand for vessel space, leading Far East to West Coast maritime freight prices to fall. According to CNBC, “when taking out the inflation in retail sales, U.S. retail sales were flat from last month so demand has not fallen sharply,” said Peter Sand, chief shipping analyst for Xeneta. “Shippers are still bringing in a lot of containers, on the East Coast and West Coast and Gulf Coast as well.”
With that said, even though rates have decreased across the board, they are still elevated on the East Coast caused by congestion and labor threats in North Europe. We will continue to monitor the shift in import demand and work with our customers to provide the best rates and options available.