Posted on January 29, 2025
Dodging a Bullet
On September 30th, 2024, the contract between the International Longshoremen’s Association (ILA) which provides labor to the ocean terminal to the East Coast and Gulf ports and the United States Maritime Alliance (USMX), representing waterfront employers, expired, triggering a three-day long strike. After bargaining, the two sides agreed to continue with the existing contract until January 15th.
Although the two sides reportedly had hammered out many aspects of the Master Contract, terminal automation remained a sticking point, and shippers were warned to expect a “work stoppage” and to make the appropriate adjustments to their shipments. But both sides renewed formal talks on January 7th and a day later announced in a joint statement, “We are pleased to announce that ILA and USMX have reached a tentative agreement on a new six-year ILA-USMX Master Contract, subject to ratification, thus averting any work stoppage on January 15, 2025.”
The statement added, “This agreement protects current ILA jobs and establishes a framework for implementing technologies that will create more jobs while modernizing East and Gulf coast ports – making them safer and more efficient and creating the capacity they need to keep our supply chains strong. This is a win-win agreement that creates ILA jobs, supports American consumers and businesses, and keeps the American economy the key hub of the global marketplace.” Next is a vote by the rank-and-file ILA membership on the new deal.
The importance of the new ILA deal to the US supply chain is massive. ILA ports cover 13 of the 20 largest container ports in the US. This is without including the Canadian ports of Montreal and Halifax that are also ILA ports.
In the period leading up to the January agreement, shippers had front-end loaded their shipments and used alternative entry ports on the West Coast to avoid having their freight tied up in a potential “work stoppage” with the Chinese New Year just around the corner and the Houthis attacks in the Red Sea forcing the re-routing of ships. So, another disruption would throw a massive spanner into the already strained workings of the supply chain. As American Apparel & Footwear president and CEO Steve Lamar, said in a release, “The rising costs from rerouting vessels are unsustainable, and the impact on American industries is severe…American consumers and businesses cannot afford further delays or disruptions. The stakes are too high, and immediate action is needed to protect our industries, workers, and the global economy.”
The downside to the preparation for a work stoppage is that inventories are again high which will influence cargo flows in the first quarter and beyond in North America. With the purchasing cycle again out of whack, how will the 2025 Peak-Season look?
But for now, US East Coast and Gulf Ports, have dodged a bullet.
Port Gains: ‘24 Great, But Will it Continue in 2025?
Many of the US top twenty container ports had very good years in 2024. Late in the year containerized import volumes rose. Descartes in their survey wrote, “In December 2024, U.S. container import volumes wrapped up the year with a solid 2,367,271 twenty-foot equivalent units (TEU), just shy of the 2.4 million TEU threshold that has typically strained port capacity. This result continues a trend of higher year-on-year volumes throughout 2024. With a slight 0.1% dip from November’s 2,368,758 TEUs, December volumes mark the third time in history when imports for the month have exceeded 2.3 million TEUs. It also marks the second-highest December volume ever, trailing only the 2,389,060 TEUs recorded in December 2021. Overall, total container imports for 2024 (28,196,462 TEUs) increased 13% over 2023 (24,957,640 TEUs).” The Descartes report added, “Imports from China saw a 1.7% increase to 902,519 TEUs, following two months of volume declines. Despite an 11.8% drop from the record high of 1,022,913 TEUs in July 2024, December’s figures were still 14.5% higher than the same month in 2023, highlighting the continued strength of U.S.–China trade. The upcoming Chinese Lunar New Year in late January, however, may slow trade volumes in early 2025 as trade operations in China are affected.”
This late year burst helped the US top container ports reach some impressive thresholds. For example, the Port of Los Angeles broke 10 million TEUs for only the second time in the port’s history while neighboring Port of Long Beach is expected to break 9.6 million TEUs a new record when the full year 2024 tally is completed.
Port of Long Beach CEO Mario Cordero said at a December press briefing, “Imports are being driven by strong consumer demand while retailers continue to move cargo here out of concern for labor negotiations at ports on the East and Gulf coasts. We will continue to handle this influx of cargo smoothly and with zero disruptions through the end of 2024.”
Mario Cordero, Port of Long Beach
The increase in business wasn’t just in the San Pedro ports. The Port of Oakland’s container business continues to grow. Total cargo volume shot up 10% year-to-date, January through November 2024, compared to the same period in 2023. The Port of Oakland also experienced a surge in traffic, as Port of Oakland Manager of Business Development and International Marketing Carolyn Almquist said, “We expect to be on track to return to our pre-pandemic baseline cargo numbers. Our total inbound and outbound volume is up, and agricultural exports are boosting our outbound cargo business.”
The West Coast ports weren’t alone in posting impressive numbers in 2024. For example, Houston also had a very good year, Charlie Jenkins, CEO of Port Houston noted in a release, “This year has been nothing short of exceptional. Our record-breaking volumes speak to the trust our customers place in us… The momentum we’ve built in 2024 lays the groundwork for continued growth next year and beyond.”
Virtually all the US East Coast ports had a good 2024. The only real exception to this growth trend in 2024 was the Port of Baltimore and there was a non-port reason responsible for the dip. On March 26, 2024, allision of the 947-foot-long Singapore-flagged containership Dali which was transiting out of the Port of Baltimore harbor with the Francis Scott Key Bridge (In the allision the Dali struck the southern pier supporting the central truss spans of the Francis Scott Key Bridge). A portion of the bridge subsequently collapsed into the river, and portions of the deck and the truss spans collapsed onto the vessel’s forward deck and subsequently collapsed into the river, and portions of the bridge’s deck and the truss spans collapsed onto the vessel’s forward deck.
The collapse effectively cut the Port of Baltimore off from the sea. But with an amazing rapid response, the wreckage was cleared and the channels partially opened. On June 12th, 2024, the Port’s deep draft channel was officially opened and traffic resumed. Although the disruption to the supply chain was significant, what was more amazing was the ability to divert cargo to other East Coast ports and the speed at which the channel was cleared of debris from the incident and traffic restored to the Port of Baltimore, which ended the year strongly.
Double-stacked rail operations to and from the Helen Delich Bentley Port of Baltimore
India: East or West
The question of whether US ports, especially the top twenty US container ports, will have another strong year is filled with caveats. How will new Trump administration’s tariffs impact international trade? Will relations with China, and indeed all the major trading partners be conducive to trade? Certainly, there is already a major shift in trade routings underway as US and European companies move to source from China to friend-shoring with near-shoring well underway. And India stands to be one of the biggest beneficiaries. Given India’s location, it is a question of whether future trade from India goes eastbound or westbound to the US — or some combination of the two?
In terms of potential disruptions there is a lot to monitor for 2025. Will the Houthis continue to pitch munitions at ships transiting the Red Sea forcing diversions around Africa and drastically cutting Suez Canal transits? Equally will low water return to the Panama Canal restricting traffic over that important waterway? And could disruptions in the South China Sea impede the usage of traditional Asian trade routes significantly hamper ship movements? These are possible disruptions that supply chain analysts are considering but like the allision with the Francis Scott Key bridge or COVID itself, disruptions are sometimes not easily identified.
However, disruptions aside, there is already a major shift in trade routings afoot as US and European companies move to sourcing from China. India stands to be one of the biggest beneficiaries of this trend and US port planners are aware of this development. Lars Jensen, CEO of Vespucci Maritime and one of the world’s best-known commentators on container shipping, said in his presentation at the South Carolina International Trade Conference (SCITC) that West Coast ports may eventually evolve into “regional” ports as opposed to gateways to North America in response to trade trends, especially with the emergence of India. Not coincidentally, in 2024 the Port of LA’s CEO Eugene Seroka made a trip to Asia starting with a stop in India.
From the East Coast perspective, securing liner services from India has become a priority. For example, Georgia Ports Authority (GPA), recently announced that the “Port of Savannah is up to eight days faster for India cargo moving to inland markets such as Atlanta, Chicago and Dallas, compared to West Coast ports.” This reach includes, “Six weekly vessel services provide direct connections between Savannah and India, while a total of ten services connect Savannah to the Indian Subcontinent.” The trend to emphasize the India connections is likely to only get stronger in 2025 and beyond.
How the top US container ports will perform in 2025 is difficult to forecast with all the potential pitfalls ahead, ranging from tariffs to other geo-political and economic forces and the great unknowns of natural disasters. But if anything, 2024 showed just how resilient the US container ports are in a pinch and that bodes well in the long run.
