Ports on the U.S. East and West Coasts predict a “modest” peak season this year, slower than the record highs seen in 2022 but in line with pre-pandemic seasonality.

Judah Levine, head of research at Freightos in Jerusalem, noted that figures from the National Retail Federation on U.S. ocean import suggest that peak season has begun, albeit at a slower rate compared to July last year.

“U.S. ocean import data estimates that July volumes increased by 4% compared to June. And though July numbers would be 3% lower than in 2019, imports are projected to increase in August and remain elevated through October – in line with typical seasonality and 3 to 6% above 2019 levels,” Levine told Asia Cargo News.

“These figures suggest that peak season has begun and will be in line with pre-pandemic seasonality.”

He also noted that last year saw “extremely elevated volumes” in the first half of the year and then decreasing – but still elevated – volumes through the second half of the year, and as much of peak season volumes were pulled forward to the early part of the year.

“Even so, projections for this year would still have July and August volumes more than 10% lower than last year, so peak season will certainly be more modest than last year but is approaching more normal growth relative to pre-pandemic volumes,” said Levine.

Based on NRF projections through December, he said total 2023 volumes would show 3% growth relative to 2019, slightly below the 2012 to 2019 average annual growth rate of 4.2%.

Mario Cordero, chief executive officer of the Port of Long Beach, said the West Coast port – one of the busiest in the Northern Hemisphere – would witness a peak season uptick this year but at a more moderate rate than in 2022.

“We anticipate a modest peak season for shipping as consumers spend a little less this year on back-to-school supplies and gifts through the holiday season,” he told Asia Cargo News. “However, we have learned in recent years that peaks can occur any time of year, as the fluid nature of e-commerce and overnight shipping has contributed to smoothing deliveries across the entire year,” he added, noting that the entire supply chain has adapted to deliver goods more quickly and efficiently.

A spokesperson at the Port Authority of New York and New Jersey also agreed with forecasts of a mild peak season this year, noting that inventory levels remain elevated.

“The 2023 peak season volume will be significantly below the 2022 peak season volumes. However, recent volumes have picked up from the lows seen at the beginning of this year,” said the spokesperson. “While some importers have indicated they expect to see normalized import flows through the peak season, it appears overall that retailers are still working through elevated inventories, which are delaying the need to restock.”

According to Levine, amid fears of more supply chain strain from the recently concluded labour actions at the U.S. West Coast ports, the disruptions were minimal; union labour slowdowns on the U.S. West Coast did not result in major disruptions or backlogs before it was resolved. However, the threat of a strike has led to a significant shift of volumes to the East Coast in the last year.

“This seems to be reversing somewhat now that the dispute is resolved,” he said, adding that the ILWU Canada strike that shut down Canadian ocean ports for the first half of July also created a backlog. It is expected to take until September for operations to fully get back to normal, especially for containers moving by rail.

For his part, Cordero signalled optimism that West Coast ports would see a return of volumes that diverted to East Coast ports since last year to avoid port congestions at North America’s busiest cargo ports.

“We’re working to recapture market share, especially that cargo that may have temporarily shifted to the East or Gulf Coasts of the United States. We feel that our port offers many advantages that will continue to be attractive to shippers,” he told Asia Cargo News.

He also noted that cargo numbers at the gateway are “slightly down” in 2023, following its two busiest years due to the import surge during the pandemic.

“However, our mid-year figures show that we are moving the same level of cargo as in 2019 before the pandemic struck,” said Cordero.

“We are confident we will see our numbers improve as we work with industry partners to rebuild our market share.”

The Port of Authority of New York and New Jersey spokesperson said its market share of total U.S. containerized imports has fallen from its record high in 2022. However, its current market share is still substantially above its pre-pandemic level.

“We remain engaged with beneficial cargo owners (BCO) to retain volume that shifted to the East Coast. The feedback we have received to date suggests that the Port will retain some of the volumes,” he told Asia Cargo News.

“Furthermore, as importers continue to diversify supply chains and sourcing utilizing other manufacturing centres, the Suez Canal may become a more attractive ocean route which would drive additional volumes to the U.S. East Coast.”

Meanwhile, U.S. ports have yet to feel the impact of the Panama Canal’s recent announcement that it would reduce daily vessel transits in the major waterway from July 30 due to drought to an average of 32 vessels per day from around 38 to 40 containerships.

“When restrictions were placed on the maximum depth for ships entering the Panama Canal, we initially heard that ocean carriers would add more ships to make up for the lost tonnage,” said Cordero. “However, vessel costs are high, and the canal’s administration has its limited crossings. We anticipate cargo being routed back to U.S. West Coast seaports and a quick return of previously diverted cargo back to the Port of Long Beach.”

The Port Authority of New York and New Jersey spokesperson noted that to date, water levels at the Panama Canal “have not resulted in impacts to port operations or diverted sailings.”

“While the daily vessel restrictions at the Panama Canal may impact the number and timing of vessels calling on the East Coast, vessel capacity utilization is currently at its lowest level going back to 2018,” said the spokesperson. “Carriers have already incorporated limited blank sailings to manage capacity based on lower container volumes worldwide, and there is sufficient vessel space available to absorb the volume.”

For his part, Levine said the recent reduction to 32 daily transits represents a 20% decrease, shortly resulting in reports of congestion and above-normal waits for passage for the first time. However, he noted that the June restrictions, which resulted in “surcharges of a few hundred dollars per container from some carriers,” did not result in significant diversions of ex-Asia containers to the West Coast or via the Suez Canal.

However, June is “typically a slow month” in ocean freight, he said. There was likely low enough volumes and slack capacity to accommodate the restrictions without much of an impact. Meanwhile, July imports increased an estimated 4% from June and August volumes are projected to be this year’s peak.

“These tighter restrictions are coming as volumes are reaching this year’s highs,” he added. “These factors could result in additional surcharges from carriers, as well as increases in congestion which would tie up capacity and push rates up. If the delays are long enough or the prices high enough, we could see diversions, probably mostly to the West Coast, which could increase rates and volumes there as well.”

Likewise, Levine noted that there is “no port congestion at the moment” due to the Panama Canal restrictions.

“Even if there are significant diversions to the West Coast and it does result in some congestion, we should not expect it to resemble the extreme backlogs that formed during the unprecedented surge in 2021 and 2022,” he said.

“Relative to 2019, both lanes have, for the most part, been below 2019 levels since March, and since the June restrictions, East Coast rates were often lower compared to 2019 than West Coast rates, suggesting there was no significant increased pressure on rates from the canal restrictions yet.”

By Charlee C. Delavin
Asia Cargo News | Hong Kong