Data Suggests America’s Imports Are Falling While Container Rates Perk Up
Import cargo volume at major U.S. ports is expected to be 22 percent lower during the first half of 2023 than the same time last year, according to the Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates.
The projection comes as data suggests container prices are on the rise. According to the Drewry World Container Index (WCI), spot freight rates for Shanghai-to-Los Angeles jumped 6 percent on a weekly basis to $1,896 per container, while Shanghai-to-New York rose 5 percent to $2,975.
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The China-to-U.S. routes are the only two of the eight trade lanes Drewry monitors to see rates climb.
The Drewry data, released Thursday, indicated that global spot freight rates appear to have stabilized, as container prices fell just $1 from week to week to $1,681, after a $3 decline in the week prior. On an annual basis, freight rates are down 78 percent.
U.S. ports covered by Global Port Tracker handled 1.78 million 20-foot containers or equivalent units (TEUs)—in April, representing a 9.6 percent increase from March but a 21.3 percent year-over-year decline.
Ports haven’t reported May numbers yet, but Global Port Tracker projected the month at 1.84 million TEU, down 23 percent year over year. June is forecast at 1.91 million TEU, a 15.3 percent year-on-year decline. That would bring the first half of 2023 to 10.5 million TEU, down 22.3 percent from the first half of 2022.
The expected import declines and increase in spot rates come amid turmoil at the West Coast ports, where 22,000 dockworkers are engaged in ongoing contact negotiations with gateway terminal operators and ocean carriers.
Disruptions at several ports forced some marine terminals to shut down at the beginning of June.
Higher spot rates could be a response to slowdowns caused by the labor actions and the impact carriers expect potential delays to have on capacity. For the East Coast, rate hikes may also reflect low-water surcharges that ocean carriers have recently implemented for containers passing through the Panama Canal.
In a statement, the NRF and Hackett acknowledged that recent port disruption hasn’t yet shown up in national data.
“The last thing retailers and other shippers need is ongoing disruption at the ports,” said Jonathan Gold, vice president for supply chain and customs policy at the NRF, in a statement. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the [Biden] administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”
The tracker previewed the first four months of the second half, when the peak shipping season kicks into gear as retailers ship in their holiday merchandise.
July is forecast at 1.99 million TEU, down 8.8 percent year over year; while August TEUs are projected to drop 10.5 percent to 2.02 million. In September, total container throughput at ports is anticipated to be 1.95 million TEU, a 4 percent decline. Finally, the tracker expects October also at 1.95 million TEU, down 2.7 percent.
The real totals will mostly hinge on whether consumer spending improves in the coming months, according to Dr. Chris Caplice, executive director at the MIT Center for Transportation & Logistics.
“If demand does come back in Q3, like it historically does, and consumers ignore inflation, then that could have a huge impact,” Caplice said. “Shippers are already poised now to diversify. You’d see growth in all the ports, East Coast and West Coast, because I don’t see the East Coast ports having any of these issues right now. Shippers will pivot, but the real wildcard is what happens to consumer demand.”
Global Port Tracker has not yet forecast the full year, but the third quarter is expected to total 5.97 million TEU, down 7.9 percent from the same time last year. The first nine months of the year should total 16.48 million TEU, down 17.6 percent year over year.
