Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, released its November report on the ongoing global shipping crisis and for logistics and supply chain professionals. The report shows that November U.S. container import volumes declined to close to November 2019 levels. Port delays continue to decrease, but major East and Gulf Coast ports still have extended wait times versus major West Coast ports. Key economic indicators during this period paint a conflicting picture about their impact on future import volumes and, combined with COVID, the Russia/Ukraine conflict and the West Coast labor situation, continue to point to further disruptions and challenging global supply chain performance going into 2023.
November 2022 U.S. container import volumes declined 12.0% from October to 1,954,179 TEUs (see Figure 1). Versus November 2021, TEU volume was down 19.4%, and only 2.8% higher than pre-pandemic November 2019. Note that November is a shorter month (30 days) and contains the U.S. Thanksgiving holiday, both of which can negatively impact container import volumes.
“Comparing fall imports in 2022 to the previous six years, November would have been expected to be lower than October (see Figure 2); however, November 2022 had the greatest October-to-November decline since 2016 at 12%,” said Chris Jones, EVP Industry & Services at Descartes. “The November U.S. container import data reaffirms that the pressure on supply chains and logistics operations has begun to lift, but there are still a number of issues that may cause further disruptions in 2023.”
All of the top 10 U.S. ports saw volume declines with the exception of the Port of Seattle (see Figure 3). The Ports of New York/New Jersey and Long Beach experienced the greatest decline.
The downward trend continued in November for U.S. container imports from China to 686,514 TEUs, a reduction of 11.1% versus October and down 31.5% from the 2022 high in August. China represented 35.1% of the total U.S. container imports, a decline of 6.4% from the high of 41.5% in February 2022. Of the top 10 countries importing into the U.S., Vietnam, Thailand and Germany on a percentage basis fared worse than China in November versus October (see Figure 4).
West Coast ports continue to lose volume and market share.
In November, East and Gulf Coast ports maintained a smaller lead in volume over West Coast ports versus October 2022, and their overall share also remained the same. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in November 2022 versus October 2022 shows that, of the total import container volume, the East and Gulf Coast ports declined slightly in November to 47.2%, down 0.7% versus October, and the West Coast ports stabilized at 36.9 in November, up 0.3% versus October. The top 10 ports lost some share in November 2022 to smaller ports, as the top 10 represented 84.1% of all volume compared with 84.3% in October 2022 and 86.6% year-on-year.
Comparing five-month periods (see Figure 5), the top West Coast ports (orange) continue to experience container throughput shifts to other ports, including the East and Gulf Coasts (blue). The Port of New York/New Jersey remained the top spot at 340,969 TEUs in October November 2022. The Port of Los Angeles came in second at 306,547 TEUs and Long Beach was third at 254,158 TEUs.
November port delays continue to decline, especially for the West Coast ports.
Overall port delays in November 2022 were lower than October 2022 (See Figure 6). The major West Coast ports are all now well below 10 days and the Port of Long Beach is in the five-day range. Much of the progress can be attributed to the reduction in volume that these two West Coast ports are experiencing. Delays at all the major East and Gulf Coast ports improved but are still longer versus the major West Coast ports, with three of the ports (Savannah, Houston and New York/New Jersey) still experiencing higher double-digit delays.
Labor, COVID and macroeconomic issues persist.
The labor situation remains unchanged and presents continued risk to West Coast port operations. The International Longshore and Warehouse Union (ILWU) contract expired on July 1; however, business has proceeded as usual with the union working with management. Until now there has been no impact on container processing as has been the case in the past. California law AB5 still remains a significant issue with no resolution in sight and there is a risk that more AB5-related stoppages could occur in other California ports in the future causing greater disruption. The continuing labor uncertainty could be a significant reason why import volumes are not shifting back to major California ports despite their improving situation.
The Chinese government has just revised its COVID policies in an effort to minimize the disruptions to society and business. However, they’re still fairly restrictive and time will tell if China can get control of its COVID outbreaks without severely impacting global supply chains.
Key economic indicators provide a mixed view of the U.S. economy and, ultimately, demand for imports. The economy grew slightly (2.9%) in the third quarter versus the second quarter and employment increased by 263,000 jobs; unemployment remained close to record levels at 3.7%. Inflation declined slightly to 7.7% in November but remains high. According to the U.S. Energy Information Association, gasoline costs, a significant contributor to high inflation rates, declined slightly to $3.39/gallon and is back to 2021 prices for the same period. Diesel costs also saw a small reduction to $4.97/gallon. Both are likely to remain elevated for the foreseeable future given the disruption of global energy markets as a result of the war in Ukraine and subsequent sanctions on Russia.
Source: Descartes Systems Group
