March U.S. Import Container Volume continues strong trajectory

In March 2024, U.S. container import volumes increased 0.4% from February, but jumped 15.7% when compared to the same month last year, indicating exceptional growth when considering the impact of the Chinese Lunar New Year on the second half of March.

Compared to February 2024, imports from China continued to decline because of the Chinese Lunar New Year, reflected by a significant volume loss at the Port of Los Angeles for the second consecutive month. Port transit delays continue to improve as the drought in Panama and Middle East conflict have yet to impact East and Gulf Coast ports. April’s update of logistics metrics monitored by Descartes show that the first quarter of 2024 has been a strong start for U.S. container imports; however, concerns around global supply chain performance are still expected throughout the year because of ongoing conditions at the Panama and Suez Canals, upcoming labor negotiations at U.S. South Atlantic and Gulf Coast ports, Middle East conflict, and the impact of the Baltimore Bridge collapse which remains to be fully reflected in U.S. container import volume data.

U.S. container imports maintain year-over-year strength.

March 2024 U.S. container import volumes remained mostly flat from February 2024, increasing only 0.4% to 2,145,341 twenty-foot equivalent units (TEUs). Versus March 2023, however, TEU volume was higher by 15.7%, and up 20.6% from pre-pandemic March 2019, demonstrating that year-over-year performance remains strong. The Chinese Lunar New Year may have masked even stronger growth as it occurred on February 11 and the holiday extended the entire week, which means its impact on U.S. imports did not occur until the second half of March 2024. For a more representative view, Descartes compared the first 15 days of March 2024 to the same time period in 2023 as these time periods were less likely to be impacted by the Chinese Lunar New Year. In this timeframe, U.S. container import growth was 22.7%.

In the previous six years, comparing February to March, import volume varied from small declines to large increases with the timing of Chinese Lunar New Year measurably impacting month-over-month container import volumes (Chinese Lunar New Year: 2024: February 11, 2023: January 22, 2022: February 1, 2021: February 12, 2020: January 25, 2019: February 5 and 2018: February 16). In this case, February volumes were not impacted by the Chinese Lunar New Year, but March volumes were and, hence, month-over-month growth appears to be lower than it really was.

For the top 10 U.S. ports, container import volume in March 2024 was down marginally by 6,180 TEUs (-0.3%) versus February 2024. The ports of New York/New Jersey (15,295 TEUs), Norfolk (6,819 TEUs), and Tacoma (8,592 TEUs) experienced the greatest container volume increases from February. The ports of Los Angeles (-31,997 TEUs) and Baltimore (-6,829 TEUs, influenced partially by the collapse of the Francis Scott Key Bridge near the end of March) posted the most significant decreases, with Baltimore representing the largest decrease by percentage (-15.7%). This is the second continuous month where Los Angeles has posted a ~30,000 TEUs decline in month-over-month volume.

Chinese imports into the U.S. fell for the second consecutive month—mostly due to the Chinese Lunar New Year, decreasing 13.8% from February 2024 to 697,375 TEUs. The holiday increased the gap (now -30.5%) from the August 2022 high (1,003,725 TEUs). Even with the February to March slowdown, the top two commodity codes (HS-2s) continued to be consumer-oriented goods such as HS-94 (Furniture, Bedding, etc.), HS-39 (Plastics and Articles Thereof). China represented 32.5% of the total U.S. container imports in March, a decrease of 5.0% from February, and down 9.0% from the high of 41.5% in February 2022.

For the top 10 countries of origin (CoO), U.S. container import volume in March 2024 fell 51,456 TEUs, a 3.4% decline from February. Imports from China (-111,672 TEUs) experienced the greatest volume decrease while India (23,657 TEUs) and South Korea (32,493 TEUs) represented the largest volume increases.

East and Gulf Coast ports maintain share lead while volume decline at the Port of Los Angeles continues.

In March 2024, volume share of the port of Los Angeles decreased 31,997 TEUs, pulling West Coast volumes down slightly from February as other ports remained mostly stable. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in March 2024 to February 2024 shows that, of the total import container volume, top West Coast ports decreased to 39.5% (down 2.5%) and top East and Gulf Coast ports increased to 44.8% (up 0.8%). Compared to smaller ports, the top 10 ports’ share in March 2024 decreased to 84.2%, down slightly (0.3%) versus February 2024

In March, port delays show continued improvement.

March 2024 port transit delays show continued improvement across nearly all the top ports apart from Tacoma and Seattle which increased slightly over February delay averages. The Port of Oakland saw the largest decline in delays (2.8 days) followed by Long Beach (1.1 days).

Trade lanes continue to be unaffected by the Panama drought and Middle East conflict in March 2024.

There is no change in the Panama Canal situation as the drought continues to affect traffic flow. The number of transit slots increased slightly in March 2024 to 27, up five from December 2023, but well below normal operations of 36 slots. The attacks on shipping in the Red Sea by the Houthi from Yemen continue to divert cargo that would traditionally move through the Suez Canal. The Houthis have threatened additional attacks on shipping lanes through the Indian Ocean.

Despite ongoing capacity constraints at the Panama Canal, volume at Gulf Coast ports remains stable. Versus February 2024, March 2024 Gulf Coast container import volumes were mostly flat, only increasing 0.2% to 226,215 TEUS. The stable volumes at East and Gulf Coast ports also meant that port transit times remained the same.

Francis Scott Key Bridge collapse disrupts trade flow at the Port of Baltimore.

On March 26, a critical bridge at the port of Baltimore collapsed. Ranked as the 10th largest port in the U.S. in 2023, the event at this major port has greater implications for trade routes, imports, exports, and the broader economy. In 2023, Baltimore represented 2.1% of U.S. container import volume and ranked tenth in the top ten ports by volume. The event threatens to disrupt this vital artery of trade, impacting not only Baltimore but also the interconnected network of ports and transportation routes along the East Coast.
South Atlantic and Gulf Coast ports face potential labor disruption later this year.

The potential for a labor disruption at South Atlantic and Gulf Coast ports in 2024 remains as the agreement between the International Longshoremen’s Association (ILA) and United States Maritime Alliance (USMX) is scheduled to expire at the end of September 2024. If no resolution is reached, labor action could disrupt operations at these ports. ILA leadership has communicated that they do not intend to extend the current agreement and have advised members to brace for the possibility of a coast-wide strike in October 2024. There have been no indications of progress from either organization.

Managing supply chain risk: what to watch in 2024.

U.S. container import volume remained flat in March 2024 yet holds a strong position when compared to pre-pandemic 2019 statistics for the same period. The economy has continued to exceed expectations, demonstrating healthy import volumes. However, challenges with the Panama drought, Middle East conflict, pending ILA contract negotiations, and recent infrastructure challenges at the Port of Baltimore point to further trade flow disruptions. Here’s what Descartes will be watching in 2024 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 improvements are made. March U.S. container import volumes remained manageable, near 2.1M TEUs.
• Port transit wait times. If they decrease, it’s an indication of improved global supply chain efficiencies or that the demand for goods and logistics services is declining. March transit delays showed a strong improvement across West Coast ports and stabilized at East and Gulf Coast 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. New COVID variants are causing infection rates to rise. An impact on supply chains and logistics resources has yet to be observed but developments need to be closely monitored throughout 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 April 8th, the Federal Reserve borrowing rate remained at 5.3% to slow inflation which was down slightly to 3.8% (as of April 5th). Job growth has remained strong, and the unemployment rate has remained favorably low. Yet, consumers continue to spend as the inflation adjusted personal consumption expenditures of durable goods was up slightly in February (latest available numbers), and still near the high for 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 March at top East Coast ports was up slightly while top Gulf Coast Ports was flat. Top East and Gulf Coast port transit times were unchanged.
• Middle East conflict. Attacks on shipping in the Red Sea by Houthis from Yemen are causing carriers to forego the Suez Canal, extending transit times, and negatively impacting global shipping capacity. The impact of diversions away from the conflict is still minimal on volumes or transit delays for the East and Gulf Coast ports.
• 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. No progress was cited in March.

Consider recommendations to help minimize global shipping challenges.

March 2024 U.S. container import volumes were mostly unchanged compared to February 2024. Overall port transit times in March improved compared to February delays. The collapse of the Francis Scott Key Bridge at the Port of Baltimore is stressing East Coast trade lanes and supply chains. Ongoing issues in Panama and the Middle East are creating pressure on global supply chains that could cause disruptions throughout 2024. 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 Descartes’ March Global Shipping Report are in bold.

Short-term:

• Track Port of Baltimore’s performance to determine the effect of the Francis Scott Key Bridge collapse on East Coast imports and trade channels.
• Track the Panama Canal situation as the drought may impact shipping capacity and timeliness and even cause rerouting of supply chains.
• Track the Middle East conflict as carriers have begun to divert shipping around Africa, and this will impact shipping capacity and timeliness.
• 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 and Israel/Hamas conflicts on logistics costs and capacity constraints. Ensure that key trading partners are not on sanctions lists.
• 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.
• For companies that have cargo moving through the Suez Canal, evaluate the impact of extended rerouting.

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