The Global Shipping Report
January Increase in U.S. Container Import Volumes Makes 2023 Look More Like 2019
U.S. container import volumes in January 2023 increased and so did their alignment with 2019 volumes. Port transit delays continued to improve, but only for the top East Coast ports. Chinese imports rebounded with even stronger growth than the overall U.S. container import number. COVID continues to be a factor and the West Coast labor situation has still not been sorted out. The economy, a key factor in container import volume growth, continues to defy predictions. The January update of the logistics metrics Descartes is tracking shows some stability but continues to point to challenging global supply chain performance in 2023.
In this Article...
U.S. container imports approached January 2019 volumes.
January 2023 U.S. container import volumes increased 7.2% from December 2022 to 2,068,493 TEUs (see Figure 1). Versus January 2022, TEU volume was down 16.1%, but only 0.3% lower than pre-pandemic January 2019. While the Chinese Lunar New Year holiday occurred in January, its impact on container import volumes won’t be felt until late February and early March 2023.
Figure 1: U.S. Container Import Volume Year-over-Year Comparison
Source: Descartes Datamyne™
Examining imports from December and January in the previous six years, January 2023 volumes would have been expected to be somewhere near those in December 2022 (see Figure 2); however, January 2023’s increase from December was the greatest of the last seven years (7.2%).
Figure 2: December to January U.S. Container Import Volume Comparison
Source: Descartes Datamyne™
The overall U.S. container import volume for the Top 10 ports in January 2023 was up by 107,059 with all but the Port of Savannah experiencing growth (see Figure 3). The Port of Long Beach showed the greatest overall container volume increase.
Figure 3: December to January Comparison of Import Volumes at Top 10 U.S. Ports
Source: Descartes Datamyne™
Chinese imports into the U.S. reversed the downward trend in January 2023 with an increase of 11.0% to 762,967 TEUs but are still down 24.0% from the 2022 high in August (see Figure 4). China represented 36.9% of the total U.S. container imports, a decline of 6.1% from the high of 41.5% in February 2022.
Figure 4: 12 Months Comparison of U.S. Total and Chinese TEU Container Volume
Source: Descartes Datamyne
For the top 10 countries of origin, U.S. container import volume in January 2023 increased 106,556 with China representing 70.7% of the growth (see Figure 5). South Korea experienced the greatest growth as a percentage while Germany was the only top 10 with a decline.
Figure 5: December to January Comparison of U.S. Import Volumes from Top 10 Countries of Origin
Source: Descartes Datamyne
West Coast ports make slight gains; smaller ports continue to take share.
In January 2023, the volume share at top West Coast ports and top East and Gulf Coast ports remained relatively stable. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in January 2023 versus December 2022 shows that, of the total import container volume, the East and Gulf Coast ports declined slightly to 45.2% down 0.3% versus December 2022 and the West Coast ports increased in January to 38.6%, up 0.5% versus December 2022. After a low in October 2022 of 36.6%, the West Coast ports have gained 2.0% volume share. The top 10 ports gained share in January 2023 compared to smaller ports, as the top 10 represented 84.0% of all volume compared with 83.6% in December 2022. However, as an overall trend, top 10 port market share has been steadily declining since mid-2022 and January and February 2022 highs of 86.6% (see Figure 6).
Figure 6: Volume Analysis for Top Ports, West Coast Ports and East and Gulf Coast
Source: Descartes Datamyne
January port transit delays rise for the West Coast ports and decline for East and Gulf Coast ports.
Overall port transit delays in January 2023 were a mixed story compared to December 2022 (See Figure 7). The major East and Gulf Coast ports saw between a 1.0 to 2.7 day transit time decrease. With the exception of the Port of Long Beach, the major West Coast ports all increased slightly with the exception of the Port of Seattle which grew by 2.6 days to 9.0 days versus December 2022.
Figure 7: Monthly Average Transit Delays (in days) for the Top 10 Ports
Source: Descartes Datamyne™
Note: Descartes’ definition of port delay is the difference as measured in days between the Estimated Arrival Date, which is initially declared on the bill of lading, and the date when Descartes receives the CBP-processed bill of lading.
Labor, COVID and stronger macroeconomic performance than predicted.
There is still no change in the labor situation which 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 reduction in transit delay times over the last year plus.
China is still seeing widespread COVID infections since it loosened it quarantine policies to minimize the longer-term disruptions to society and business. The Chinese population has little to no immunity and the impact of COVID on manufacturing supply chains could continue for quite some time.
Key economic indicators show a stronger U.S. economy than predicted and this could drive more demand for imports in 2023. Key economic indicators show a stronger U.S. economy than predicted and this could drive more demand for imports in 2023. Gross Domestic Product (GDP) grew 2.9% in the fourth quarter of 2022 and is the second consecutive quarter of growth. Employment increased by 517,000 jobs in January—up almost 290,000 jobs versus December—and unemployment declined to 50-year record levels at 3.4%. Strong employment numbers often put pressure on supply chain and logistics operations as they are labor-intensive and compete more broadly to find resources. Inflation has receded slightly but remains high and the U.S. Federal Reserve raised interest rates again in late January albeit at a much smaller level (0.25%) than previous increases. The Fed has stated that it will continue to evaluate the need to raise interest rates to dampen inflation and possibly the economy. According to the U.S. Energy Information Association, gasoline costs, a significant contributor to high inflation rates, increased slightly to $3.45/gallon and is back to 2021 prices for the same period. Diesel costs are also up slightly to $4.62/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.
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Managing supply chain risk: what to watch in 2023.
U.S. import volume reversed its decline in January and 2023 is starting to look more like 2019, but with continued supply chain turbulence. In addition, several significant one-time events could exacerbate the ability to move goods globally. Here’s what Descartes will be watching:
- Monthly TEU volumes between 2.4M and 2.6M. This level will continue to stress ports and inland logistics until infrastructure can be enhanced. January U.S. container import volume is at 2019 levels.
- Port transit wait times. If they decrease, it’s an indication of improved global supply chain efficiencies capabilities or that the demand for goods and logistics services is declining. Port wait times were down again slightly in January at East and Gulf Coast ports, but up slightly for West 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. China has relaxed its rules and now faces more widespread COVID and it will be a while before the country builds a level of immunity that will not impact manufacturing and logistics operations.
- Key economic indicators such as GDP growth, the inflation rate, monthly BLS Jobs Report, inventory levels and consumer purchases. A strong economy and consumer purchasing habits fundamentally affect the demand for imports and U.S. container volumes. Continued strong hiring numbers puts pressure on supply chain and logistics operations’ ability to have adequate resources to meet customer demand. Despite the U.S. Federal Government’s attempt to slow the economy, it remains more resilient than anticipated. GDP grew in the fourth quarter of 2022 and January hiring was twice what was expected.
- ILWU contract negotiations. The ILWU contract has expired, but to date there hasn’t been an impact on West Coast port operations; however, California AB5 has the potential to cause more disruptions to California port operations. There has been no indication of progress or a date for an agreement.
- Inflation and the Russia/Ukraine conflict. Inflation may be the only way to slow down the strong U.S. economy and ultimately help to alleviate the global logistics capacity-related problems that exist. Inflation has declined for the last several months but remained high in January. Both diesel and gas prices have stabilized but remain higher due to the effect of the Russia/Ukraine conflict.
Consider recommendations to help mitigate the pressure of ongoing global shipping disruptions.
January 2023 U.S. container import volumes reverses the December 2022 decline and aligns closely with pre-pandemic 2019 numbers. The U.S. economy remains relatively strong despite numerous pressures to slow it down and this could drive container import volumes for the upcoming year. East and Gulf Coast poJanuary 2023 U.S. container import volumes reverses the December 2022 decline and aligns closely with pre-pandemic 2019 numbers. The U.S. economy remains relatively strong despite numerous pressures to slow it down and this could drive container import volumes for the upcoming year. East and Gulf Coast ports continue to see port transit times dropping while transit times at West Coast ports are increasing slightly. Still unresolved labor-related issues are keeping importers from moving volume back to the West Coast. This data reaffirms that the pressure on supply chains and logistics operations is continuing to lift, but there are still issues that can cause further disruptions. Descartes will continue to highlight key Descartes Datamyne, U.S. government and industry data in the coming months to provide insight into global shipping. We are staying the course with our current perspectives and recommendations:
- Monitor the impact of California law AB5 on owner-operators serving California ports for potential disruption or degradation of port container processing performance.
- Monitor ILWU contract negotiations for progress.
- 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 conflict on logistics costs and capacity constraints. Ensure that key trading partners are not on sanctions lists.
- Focus on keeping the supply chain resources you have, especially drivers. The old adage “a bird in the hand is worth more than two in the bush” definitely applies here. Building trips to reduce stress and improve quality of life to retain drivers is now as or more important than wage increases.
- Continue to look for less congested transportation lanes, including smaller ports, to improve supply chain velocity and reliability. Total transit time is important, but so is supply chain predictability. Evaluate alternative transportation lanes into the U.S., including entry through northern and southern borders and inland ports.
- 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.
Note: This report uses the initial compiled release of U.S. Customs and Border Protection (CBP) data and is subject to revision at a later date by CBP. The revised data can be seen in Descartes Datamyne.
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