February Decrease Keeps 2023 U.S. Container Imports on 2019 Path

U.S. container import volumes in February 2023 decreased significantly but remained aligned with pre-pandemic 2019 volumes. Despite the reduction, port transit delays increased for the top West, East and Gulf Coast ports. Chinese imports followed the downward trend along with the rest of the top countries of origin. COVID continues to be a factor and the West Coast labor situation has still not been sorted out. The February update of the logistics metrics Descartes is tracking shows some consistency with pre-pandemic import volume seasonality but continues to point to challenging global supply chain performance in 2023.

February 2023 U.S. container import volumes decreased 16.2% from January 2023 to 1,734,272 TEUs (see Figure 1). Versus February 2022, TEU volume was down 25.0%, but only 0.3% lower than pre-pandemic February 2019. A couple points to consider with the February numbers: 1) February has 28 days versus 31 for January and 2) With the Chinese Lunar New Year holiday occurring in January 2023, its impact on container import volumes would be seen in late February and early March 2023.

Figure 1: U.S. Container Import Volume Year-over-Year Comparison

Source: Descartes Datamyne™

Examining imports from January and February in the previous six years, February 2023 volumes would have been expected to be significantly lower than January 2023 (see Figure 2). In fact, the decrease was the greatest of the last seven years (16.2%) with the exception of February 2020, which was the start of the pandemic (-17.9%).

Figure 2: January to February U.S. Container Import Volume Comparison

Source: Descartes Datamyne™ 

The overall U.S. container import volume for the Top 10 ports in February 2023 was down by 296,390 TEUs versus January with all but the Port of Tacoma experiencing declines (see Figure 3). The Port of Los Angeles showed the greatest overall container volume decrease, representing 40% of the overall decrease in TEU quantities.

Figure 3: January to February Comparison of Import Volumes at Top 10 U.S. Ports

Source: Descartes Datamyne™ 

After an upward move in January, Chinese imports into the U.S. returned to a downward trend in February 2023 with a decrease of 17.1% to 632,702 TEUs—which is down 37.0% from the 2022 high in August (see Figure 4). China represented 36.5% of the total U.S. container imports, a decline of five percentage points 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 February 2023 decreased 17.1% For the top 10 countries of origin, U.S. container import volume in February 2023 decreased 16.5% (239,337 TEUs) with China representing 54.3% of the decline (see Figure 5). Only imports from Japan experienced growth (2%).

Figure 5: January to February Comparison of U.S. Import Volumes from Top 10 Countries of Origin

Source: Descartes Datamyne

In February 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 February 2023 versus January 2023 shows that, of the total import container volume, the East and Gulf Coast ports increased to 46.8% up 1.6% versus January 2023 and the West Coast ports decreased in February to 36.0%, down 2.8% versus January 2023. This is the lowest share for West Coast ports in the last year. The top 10 ports lost share in February 2023 compared to smaller ports, as the top 10 represented 82.8% of all volume compared with 84.0% in January 2023. Market share for the top 10 ports has been steadily declining since mid-2022 with February 2023 also being the lowest share in the last year (see Figure 6).

Figure 6: Volume Analysis for Top Ports, West Coast Ports and East and Gulf Coast Ports

Source: Descartes Datamyne

Overall port transit delays in February 2023 were slightly higher compared to January 2023 (see Figure 7). The major East and Gulf Coast ports saw a transit time increase of 0.4 to 1.1 days. For all major West Coast ports, transit times increased from 0.1 to 1.0 days. With the exception of the Port of Long Beach port transit delays for West Coast ports in February 2023 are now higher than in 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.

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 last year; 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 at 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 its 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.

According to the U.S. Energy Information Association, gasoline costs, a significant contributor to high inflation rates, decreased slightly to $3.34/gallon and somewhat stabilized. Diesel costs are also down slightly to $4.29/gallon and very close to February 2022 prices. 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.

U.S. container import volume declined in February and continues to track to 2019’s numbers, 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. February U.S. container import volume remains at 2019 levels that are significantly below this range.
  
• 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 up slightly in February at West, East and Gulf 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. COVID continues to impact available supply chain and logistics resources and operations globally, adding to supply chain performance variability.  
  
• 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. While the Consumer Price Index report for March was not available when this update was produced, both diesel and gas prices have stabilized but remain higher because of the Russia/Ukraine conflict.

February 2023 U.S. container import volumes reverses the January 2023 increase and continue to align closely with pre-pandemic 2019 numbers. Despite volume decreases, West, East and Gulf Coast ports saw port transit times 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:

Short-term: 

• 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.

Near-term:  

• 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.

Long-term:  

• 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.