Posted on July 27, 2022
Port congestion is no longer just a West Coast story, but fears of it continue to drive the trend of movement toward East and Gulf coast options.
A research report released last week from Blue Alpha Capital founder John McCown analyzed the country’s top 10 ports on import performance in June, with volume up for the month 5.9 percent from the year-ago period to total 2.2 million twenty-foot equivalents (TEUs).
On a port-by-port basis of the country’s 10 largest, Long Beach saw the highest import container volume in June, with growth of 16.4 percent to total 415,677 twenty-foot equivalents (TEUs). Charleston saw the largest decline of 14.7 percent to 90,090 TEUs.
Shippers that diverted cargo to the East and Gulf coasts during the pandemic-related supply chain disruptions have now led to congestion there with those ports operating at or near the top of their capacity, with a combined 9.7 percent increase for the month. McCown suggested in his report the second half of the year could see import volumes decline from year-ago comparisons.
The West Coast ports by contrast notched a 2.3 percent increase for the month, ultimately marking the 13th month in a row where East and Gulf coast ports saw more combined growth than their West Coast counterparts.
“The port congestion situation has morphed from primarily impacting the West Coast to where it has shown up on all coastal ranges,” McCown said in his report.
He pointed to the number of ships waiting to berth as a good indicator of that, with vessels at West Coast ports accounting for one-third of those in queue. That compares to West Coast ports accounting for two-thirds of the pile-up in January.
“The last month has seen an increase in this eastward shift and now Houston and New York have as many container ships waiting for berths as [Los Angeles and Long Beach] combined,” McCown said.
The largest spike in waiting ships seen at a port in the past month has been at Savannah as it grapples with a lack of capacity, which is seen in the 14-day wait time.
Even as diversions to alternative ports have helped ease container congestion at Los Angeles and Long Beach, rail is now the sticking point.
A lack of labor, among other factors, has caused a pile-up in containers waiting to be loaded onto rail. Those containers now represent the glut sitting on the docks, Port of Los Angeles executive director Gene Seroka said in a media briefing.
In fact, where rail containers typically had been sitting on docks for an average of two days, the wait has jumped to seven-and-a-half, according to Seroka.
Part of the more recent reason a container dwell fee originally announced in October has not been implemented is because of rail cargo accounting for 75 percent of the containers currently idling.
Seroka told reporters in speaking to the fee that “we’re going to keep every tool in our kit as possible” and “if the import dwell fee needs to be there for consideration, it will remain,” but didn’t see the current operating environment to be the same as when the concept was first introduced last year.
On a longer-term view, continued growth likely can’t be sustained at the compounded annual rate of 5.6 percent seen between 1995 and 2021, according to McCown’s report.
“The present port system is not in a position to accommodate the geometric growth on the foreseeable horizon,” McCown wrote. “Containers can’t be endlessly stacked ever higher in existing terminals.”
The long-term trend of movement away from the West Coast that began in 2016 accelerated in 2021 with the pandemic to ensure on-time deliveries and availability of stock. A slight improvement for the West Coast was seen at the start of this year, but McCown noted the beginning of another fall-off for the trailing three months starting in March.
