Top West Coast Ports’ Share of March Volumes Increases Significantly

U.S. container import volumes in March 2023 increased significantly from February 2023, largely driven by activity at the Ports of Los Angeles and Long Beach, which kept the trendline aligned with pre-pandemic 2019 volumes. Despite overall volume increases, delays stabilized at all ports. Imports from China continued their downward trend. COVID continues to be a factor and the West Coast labor situation has still not been sorted out. The March 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. 

March 2023 U.S. container import volumes increased 6.9% from February 2023 to 1,853,705 TEUs (see Figure 1). Versus March 2022, TEU volume was down 27.5%, but up 4.2% from pre-pandemic March 2019. Two points to consider with the March numbers: 1) March has 31 days versus 28 for February and 2) With the Chinese Lunar New Year holiday occurring in January 2023, there still could be some impact on container import volumes in early March 2023.

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

Source: Descartes Datamyne™

Examining the increase in import volumes from February to March in the previous six years, March 2023 volumes show one of the larger increases from February of the same year (see Figure 2). However, March 2023 was the lowest increase from February (6.9%) since consumer demand grew significantly because of the pandemic.

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

Source: Descartes Datamyne™ 

The overall U.S. container import volume for the Top 10 ports in March 2023 was up by 98,379 TEUs versus February (see Figure 3). The Port of Los Angeles showed the greatest overall container volume increase (30%), followed by the Port of Long Beach (25%). This growth is counterintuitive given that 1) China volumes declined again in March and 2) statements made by importers and logistics companies, according to Logistics Management, that the extended ILWU contract negotiations were one of the prime reasons for the shifting of freight from the West Coast. In addition, no country’s exports to the U.S. or commodities experienced a surge from February to March.

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

Source: Descartes Datamyne™ 

As mentioned previously, Chinese imports into the U.S. continued a downward trend in March 2023 with a decrease of 7.4% to 586,129 TEUs—down 41.6% from the August 2022 high (see Figure 4). China represented 31.6% of the total U.S. container imports in March, a decline of 4.9% from February and 9.9% 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 March 2023 increased 2.5% (30,257 TEUs) with Italy (50%), Thailand (39%) and South Korea (23%) having the greatest percentage increases (see Figure 5).

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

Source: Descartes Datamyne

In March 2023, the volume share at top West Coast ports grew significantly. Comparing the top five West Coast ports to the top five East and Gulf Coast ports in March 2023 versus February 2023 shows that, of the total import container volume, top East and Gulf Coast ports increased slightly to 47.7%* up 0.9% versus February, but top West Coast ports increased to 43.0%, up 7.0% versus February 2023. Led by growth at the top West Coast ports, the top 10 ports gained share in March 2023 compared to smaller ports, as the top 10 represented 90.7% of all volume compared with 82.8% in January 2023. In March 2023, the market share for the top 10 ports reversed the steady decline that has been occurring since mid-2022 and was the highest 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

*This number originally published 4/10/2023 has been corrected as of 6/5/2023.

Overall port transit delays in March 2023 were very consistent with February 2023 (see Figure 7). Transit times at the major East and Gulf Coast ports remain slightly lower than at major West Coast ports.

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, 2022; 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. However, there are calls to have the federal government assist in the negotiations to resolve the issue. 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 Administration, gasoline costs, a significant contributor to high inflation rates, increased slightly to $3.50/gallon, but down $0.63/gallon from the same time in 2022. Diesel costs are also down slightly to $4.11/gallon and down $1.04/gallon from last March. The diesel decline is good news, but both are likely to remain elevated for the foreseeable future given the disruption of global energy markets because of the war in Ukraine and subsequent sanctions on Russia. 

U.S. container import volume declined in March 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. March 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. March port wait times were consistent with February at all 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. The latest Consumer Price Index report available (February 2022) shows a continuing decline in inflation, but it is still high. Diesel prices continue to decline, but gas prices have risen slightly but remain elevated because of the Russia/Ukraine conflict. 

March 2023 U.S. container import volumes reverse the February 2023 decrease and continue to align closely with pre-pandemic 2019 numbers. Despite volume increases, West, East and Gulf Coast ports saw port transit times stabilize. 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 later by CBP. The revised data can be seen in Descartes Datamyne..