Red Sea Skirmishes Won’t Slow Down Heavier Flow of Cargo Into US Ports
While ocean carriers continue to avoid the Suez Canal and container ships endure multiweek delays, that isn’t likely to prevent more vessels from entering the U.S. to the start the year, according to the Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates.
Despite the ongoing skirmish between joint U.S. and U.K. naval forces and Iran-aligned Houthi rebels attacking commercial vessels in the Red Sea, inbound cargo volume at major U.S. ports is expected to see year-over-year increases through the first half of 2024.
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U.S. ports covered by the Global Port Tracker handled 1.87 million 20-foot equivalent units (TEUs) in December, the latest month for which final numbers are available. That was down 1 percent from November, but up 8.3 percent year over year. December’s results brought 2023 total inbound cargo volume to 22.3 million TEU, down 12.8 percent from 2022.
The Port of Long Beach had a major impact on total December numbers, with total TEUs reaching 709,819, reflecting a 30 percent increase year over year—the gateway’s highest annual increase in 2023. The Port of New York & New Jersey saw a throughput of 633,925 total TEUs, up 3.4 percent over December 2022 numbers, while the Port of Los Angeles closed out 2023 processing 747,335 TEUs, 2.5 percent more than last year.
For the first half of 2024, top U.S. ports including Los Angeles, Long Beach, New York & New Jersey, Houston, Savannah and more are expected to reel in 11.1 million TEUs, up 5.3 percent from the same period last year.
Ports have not yet reported January’s numbers, but the tracker projected the month at 1.81 million TEU, up 0.3 percent year over year. February is forecast at 1.86 million TEU, up 20.4 percent year over year, and March is forecast at 1.71 million TEU, up 5.5 percent from last year.
February is traditionally the slowest month of the year for imports because of Lunar New Year factory shutdowns in China, but the excessive ordering of goods amid the concerns of Red Sea-related delays is pushing the anticipated TEU higher. April is forecast at 1.83 million TEU, up 2.6 percent year over year, while May is projected to be up 0.3 percent to 1.94 million and June at 1.93 million TEU, up 5.5 percent.
“Only about 12 percent of U.S.-bound cargo comes through the Suez Canal but the situation in the Red Sea is bringing volatility and uncertainty that are being felt around the globe,” Jonathan Gold, vice president for supply chain and customs policy at NRF, in a statement. “U.S. retailers are working to mitigate the impact of delays and increased costs. However, the longer the disruptions occur, the bigger impact this could have. More needs to be done among partners and allies to ensure the safety of vessels and crews in order to avoid yet another year of supply chain disruption.”
Gold has brought the issue to both Congress and the Federal Maritime Commission (FMC) in separate hearings recently, sharing concerns about the potential impact that elevated spot freight rates have on SMBs that can’t negotiate long-term shipping contracts. He also urged both parties to ensure the fees and surcharges associated with the Red Sea disruptions cover real costs.
Hackett Associates founder Ben Hackett said ocean carriers are using a surplus of capacity built up during the Covid-19 pandemic to ease the impact as voyages are diverted around Africa’s Cape of Good Hope or to the U.S. West Coast, noting that improvements have already been seen compared to the end of 2023.
“The shipping industry has rapidly adjusted by adding extra vessels to its networks, and has returned to normal weekly ship arrivals,” Hackett said. “Service from Asia to the U.S. East Coast is working well and the dramatic rise in freight rates is showing signs of easing, with pressure from shippers likely to quickly bring these down.”
In a post on LinkedIn, Lars Jensen, the founder of container shipping consultancy Vespucci Maritime, noted early Monday there had been a six-day streak with no attacks on merchant vessels before a new vessel was reportedly attacked that morning.
“This incident once again raises the question: What does ‘safe passage’ look like?” posited Jensen. “Container lines are unlikely to resume the Suez routing for their large deep-sea vessels until they can get safe passage, but how many days need to pass without incident before this is judged to be the case?”
The attack took place two days after U.S. Central Command forces successfully conducted self-defense strikes against two unmanned surface vessels and three mobile anti-ship cruise missiles north of Al Hudaydah, Yemen, that were prepared to launch against vessels traversing the Red Sea.
