While inbound container growth appears to be flattening for now, the long-term outlook spells trouble for U.S. ports.
Liner industry veteran John McCown, founder of Blue Alpha Capital, is out with his July report on the top ten U.S. ports, showing another month of gains in July even as U.S. consumers’ pandemic-fueled spending is starting to cool.
McCown’s report shows the ten largest ports in the United States registered a 0.7% increase in inbound container volumes in July compared to the same month last year.
There’s been much debate about when the U.S. import growth would flatten or turn negative. The time appears to be now.
McCown’s report shows year over year gains have fallen considerably since last August following many months of double digit growth. This flattening was inevitable, considering ports are already operating at or near capacity. Looking towards the rest of the year, growth is expected to remain flat or likely turn negative during some months. This can be attributed to more difficult comparisons to last year and wider port congestion, McCown says in his report.
West to East Cargo Shift
Speaking of congestion, McCown points out that the situation has changed more in its composition rather than total impact. While West Coast ports, particularly in Southern California, have made some progress in reducing backlogs, congestion has spread elsewhere, with places like New York, Savannah and Houston seeing high numbers of ships waiting for berths. Even smaller ports are seeing record volumes.
According to McCown, the West Coast represented two-thirds of containerships waiting for berths in January, but it now represents less than on-third as congestion has shifted eastward as ports there struggle under the weight of heightened imports (and empties, in some cases).
McCown has been talking about this West to East cargo shift for months now. Shippers and ocean carriers facing long wait times on the West Coast have shifted cargoes and capacity to East and Gulf coast ports in hopes of finding greener pastures. Meanwhile, the possiblity of challenges resulting from ongoing labor talks between West Coast dockworkers represented by the ILWU and port employers has further contributed to this shift.
“This whack-a-mole effect where relief of waiting times on the West Coast resulting from deployment changes led to moving some of that congestion to East/Gulf Coast ports is yet another example of network effects within container shipping systems that have been evident throughout the pandemic,” McCown writes.
Long-Term Challenge
Bigger picture… the fact that containerships are now waiting on all three U.S. coasts, particulary now during a period a flat growth, is a “tangible reminder” that many U.S. ports are operating at or near capacity and not equipped to handle foreseable future growth.
Even if the compound annual growth rate (CAGR) for inbound containers comes in at a conservative 2.8%, as estimated by DNV (which is half of the 5.6% CAGR witnessed from 1995-2026), the number of inbound containers to U.S. ports will be twice as much in 25 years and four times as much in 50 years, according to McCown.
“The present U.S. port system is not in the position to accommodate the geometric growth in container volume that is on the foreseable horizon. To handle that growth, something more than just marginal improvements to capacity are needed,” McCown writes. “Among other things, new container terminals and even entirely new container ports will be needed to efficiently handle container volume over the ensuing decades. This will require significant infrastructure investment… Without meaningful steps taken, such disruption will be more episodic in the future as volume grows over time.”
According to McCown’s calculations, disruptions related to congestion is costing the U.S. economy $82 billion annually in additional container shipping costs, based on Q2 2022 numbers. While infrastructure investments may be costly, the cost of doing nothing is likely to be much, much greater.
A tense maritime incident unfolded today in the off the Estonian coast when Estonian naval forces attempted to detain the M/T JAGUAR, a crude oil tanker allegedly part of Russia’s...
Paul Pathy, President & CEO of Canada’s leading dry bulk shipping company Fednav, has made history by becoming BIMCO’s first President from the Americas. His election took place at BIMCO’s...
Days before a surprise U.S. ceasefire agreement with Houthis, U.S. intelligence started picking up indications the Yemeni fighters were looking for an exit after seven weeks of relentless U.S. bombings, four U.S. officials said.
6 hours ago
Total Views: 787
Get The Industry’s Go-To News
Subscribe to gCaptain Daily and stay informed with the latest global maritime and offshore news
— just like 109,099 professionals
Secure Your Spot
on the gCaptain Crew
Stay informed with the latest maritime and offshore news, delivered daily straight to your inbox
— trusted by our 109,099 members
Your Gateway to the Maritime World!
Essential news coupled with the finest maritime content sourced from across the globe.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.