Ocean freight capacity and volumes continue US West to East coast shift, with port congestion following suit

Xeneta’s latest market analysis details a continuing shift in container shipping capacity on routes from the Far East to the US, as increasing volumes arrive on the East Coast and trade declines into major West Coast hubs.

However, this is also impacting on congestion, which is now hitting reliability on vessels heading to the East, while Western destinations show much-needed improvement. The situation has now deteriorated to the point where less than one in five container ships currently arrive on time on the East Coast (18.7%, Source: Sea-Intelligence).

Changing course

“We’ve seen a stretched supply chain on the US West coast for a protracted period,” comments Peter Sand, Chief Analyst, Xeneta. “This has been frustrating for both the carriers and cargo owners, with, at peaks times, vessels having to wait for three weeks, or more, for a berth at Los Angeles and Long Beach. That congestion has provided impetus for carriers to adjust capacity and try to side-step bottlenecks, looking East instead.”

Sand notes that, in the past three months, capacity between the Far East and the US East Coast rose by 18.9% year-on-year. That translates to an average capacity of 210 000 TEU over the 12 week period (to 24 July), equivalent to carriers adding four 8 750 TEU ships a week against 2021 trades.

Too much of a good thing?

“This is a major shift,” he says, “but unfortunately it also comes with major repercussions. As more vessels and cargo heads East – there’s been a 11.9% increase in volumes so far this year, with a 7.3% year-on-year increase in May alone – the chain on this side of the country is pressurized, and there’s a price to pay in terms of reliability. So, in a way, the East Coast becomes a victim of its own success and the West has the breathing space to recover somewhat.

“This begs the question; what do carriers do now? Shift back again, or hold out for improvements?”

East vs West

Despite the change in focus, the West Coast still enjoys the lion’s share of capacity from the Far East, welcoming some 310 000 TEU a week in the aforementioned 12-week period. This equates to 61.3% of capacity, against a share of 66.1% on 24 July 2021 (dropping 1.7% in the last three months).

Volumes have followed a similar pattern, falling 8% for the year to date, with May 2022 registering a significant 12.8% year-on-year decline. The East Coast, meanwhile, showed a 4.4% year-on-year climb in volumes for May. The West Coast now commands a 59.8% volume share.

Work to be done

Sand concludes: “Despite ongoing concerns portside, with the continued threat of industrial action from dockworkers, amongst other factors, those shipping to the West Coast will have enjoyed easing congestion of late. Fewer ships mean less pressure, and schedule reliability has now reached its highest level in over a year.

“Nevertheless, only 24.8% of ships are arriving on time – with an average delay of 9.9 days (against an average of nine days on the East Coast) – so there’s still a lot of work to be done. It’ll be very interesting to see how this develops, as well as, of course, how rates are impacted by the capacity adjustment and changing demand picture going forwards.”

Oslo-based Xeneta’s unique software platform compiles the latest ocean and air freight rate data aggregated worldwide to deliver powerful market insights. Participating companies include ABB, Electrolux, Continental, Unilever, Nestle, L’Oréal, Thyssenkrupp, Volvo Group and John Deere, amongst others.