Russian oil exports are still booming and EU is still reliant on Russia

The EU is going to ban imports of Russian crude and petroleum products. It still has a long way to go to find replacement supplies.

Tanker shipping has already seen a big trade shift in the wake of Russia’s invasion of Ukraine. But it’s nothing compared to what will happen when the EU bans tanker cargoes from Russia.

New data from commodity analytics firm Kpler confirms that Russian seaborne petroleum exports remain historically high and the EU remains a major buyer.

The EU has made some progress in weaning itself from Russia. But it has a long way to go and time is short. The EU ban on seaborne crude imports begins on Dec. 5, the ban on refined products imports on Feb. 5.

Given how high volumes remain today, these deadlines could lead to abrupt, wrenching and significant changes to global commodity flows.

Russian crude exports on the rise

Kpler’s data shows that Russia’s seaborne crude exports averaged 3.4 million barrels per day (b/d) during the seven months since the war began. That’s up 17% versus the same period in 2021.

chart showing Russian crude and products exports
(Chart: American Shipper based on data from Kpler)

Russia’s clean products exports averaged 1.4 million b/d in March-September, down 5.5% year on year (y/y).

Altogether, Russia’s crude and products seaborne exports averaged 4.8 million b/d in March-September, up 9% y/y. So, despite all the “self-sanctioning” rhetoric about not supporting the military aggressor, more Russian cargo is being loaded aboard tankers than before the invasion.

EU progress on replacing Russian crude

The EU is less reliant on Russian crude than Russian refined products (particularly diesel). Even so, Russia’s share of EU seaborne crude imports remains substantial, even after recent trade shifts.

Kpler data shows that EU countries imported an average of 1.2 million b/d of seaborne crude during the seven months since the war began. That’s down an average of 320,100 b/d or 21% compared to the same period in 2021.

chart showing EU crude imports
(Chart: American Shipper based on data from Kpler)

“EU members have materially cut imports from Russia, substituting barrels from the U.S. and elsewhere,” Reid I’Anson, senior commodity analyst at Kpler, told American Shipper.

The average volume of EU crude imports from countries other than Russia was 1.3 million b/d higher in March-September versus the same months the year before. This has been a big plus for tanker rates, as replacement cargoes are traveling longer distances.

Tanker demand is measured in ton-miles: volume multiplied by distance. By replacing (and heavily supplementing) short-haul Russian crude with longer-haul replacement crude, the EU has boosted tanker demand.

The shift away from Russia in the past seven months is dwarfed by what needs to occur starting Dec. 5, when the EU import ban hits.

To put the scale of the coming shift in perspective, the EU’s average crude imports from Russia in September are down 668,926 b/d from February, when the invasion occurred. That decline took seven months. Less than 10 weeks from now, the ban goes into force. At that point, EU crude imports from Russia need to fall by almost twice as much as they did in the seven months since the invasion.

The EU needs to bring the current market share of Russian seaborne crude — at 12% this month, according to Kpler data — down to zero.

EU still highly dependent on Russian distillates

While Russian exports of products to all destinations have moderately decreased since the war began, the EU has actually increased its products imports from Russia during this period.

“On the clean product side, EU members continue to import a lot of Russian diesel/gasoil [with] basically no cut in volume since the war began,” said I’Anson.

He explained that the EU’s replacement of Russian crude with U.S. crude has had the side effect of increasing EU demand for Russian diesel. It “reinforces the EU need for distillates given that U.S. crude imports are notably more light and sweet compared to Russian grades, and light grades yield more gasoline and light ends [versus distillates].”

Kpler data shows that EU imports of Russian clean products averaged 945,501 b/d in March-September. This is up 12% or 102,716 b/d compared to the same period in 2021.

And there’s yet another plus for product-tanker rates: The EU not only hiked its imports from Russia, it also increased imports from other sources further afield, adding to tanker ton-mile demand. Average EU imports of seaborne clean products from non-Russian sources were up an average of 193,381 b/d in March-September 2022 versus March-September 2021.

(Chart: American Shipper based on data from Kpler)

Looking forward, the EU import ban on Russian products appears much more problematic than the looming ban on Russian crude.

Over the past seven months, Russian seaborne products imports accounted for an average of 28% of total EU products imports — double Russia’s share of the EU’s seaborne crude imports during the same period.

Click for more articles by Greg Miller 

Ports, carriers prep for disasters — everything from hurricanes to fires

Port officials and carriers prepare for hurricanes and other emergency situations year-round.

When Hurricane Harvey wreaked havoc across the Houston area in 2017, Colin Rizzo had never seen anything like it before.

Rizzo is Port Houston’s director of emergency management and responsible for planning and directing the facility’s emergency and disaster preparedness. 

Harvey was a Category 4 hurricane that made landfall in Texas and Louisiana in late August 2017, causing catastrophic flooding and more than 100 deaths.

“Harvey was almost just the opposite [of other hurricanes] in that it was so widespread, but it wasn’t a wind event. It was a flood event,” Rizzo said. “Harvey was 50 inches of rain across the area. Our impact with Harvey was very different at the port because our terminals were damaged somewhat, but a lot of our employees were dealing with the destruction of their homes.”

Rizzo said the challenge with Hurricane Harvey was getting the port back in operation quickly, while making sure employees were cared for.

“The last thing employees wanted to hear about [was] ‘Hey, you need to come back to work tomorrow,’” Rizzo said. “We did a lot of outreach to our employees, finding out how many employees we had available to get back into operations. Our roads could be clear, ships could be coming in, but if we don’t have staff to man those gates or run those containers, it’s going to be worse than if we didn’t open.”

Officials at Crowley Maritime said it takes dedicated and trained personnel to make sure emergencies such as hurricanes don’t disrupt terminal or shipping operations.

“One of the important qualities is to have a good leader that can collaborate in an effective team,” Heather Harrison, Crowley Maritime’s director of corporate safety and quality, told FreightWaves.

Another trait that emergency response team leaders and members need is calmness, said Scott Hess, senior director of health, safety, security, environment and sustainability at Crowley Maritime.

“Some of the best incident managers that I’ve come across in my career are calm, they’re collected, they are open to suggestions, and they check their ego at the door,” Hess said.

As Ian moves toward Florida’s west coast as a Category 3 hurricane with a projected path through Tampa late Wednesday, FreightWaves spoke to several ports and a carrier about how they prepare and deal with disasters and major weather events.

Emergency teams help ports and ocean carriers keep supply chains moving

Emergency operations workers such as Rizzo, Harrison and Hess are essential personnel that work to make sure a port is prepared in case of any emergency or catastrophe.

Port Houston’s emergency operations team handles most of the prepping at the facility when a major storm is approaching. It is responsible for critical supplies, stacking loaded containers in a strategic fashion, organizing cranes to function as barriers and making sure all portable buildings are properly secured.

“In addition, they secure all terminal equipment, fill extra drums with fuel, lubricants, water and hydraulic fluids for use after the storm, board up all windows and keep all transportation vehicles supplied with fuel (boats, cars, vans, trucks), according to a blog post from Port Houston.

Rizzo said it takes a small army of port workers to make sure all the equipment and facilities are secured in the event of a hurricane or tropical storm.

“There would be hundreds of people working on our team to secure the port,” Rizzo said. 

Port employees must make sure to tie down crucial infrastructure like ship-to-shore cranes at the container terminals because it could take months to repair or replace them, Rizzo said. 

“You can’t take these huge cranes down and hide them from the wind,” Rizzo said. “Right now, if we had a storm on the way, one of the things that would be on my list would be what are we going to do about cranes and containers? Do we even have the room to stack these containers to three or four high? Are we going to tie them down harder somehow or shut down a little bit sooner and start filling our driveways with containers to protect the port?”

Once the port is secured, Rizzo said the facility has a team that would stay on-site for the duration of a hurricane or weather event.

“We have a small team, about 30 or 40 people and another 50 public safety people,” he said. “Our fire department would be here at full strength if not even higher, probably another 30 or so, and they would be on the fireboats to actually ride the storms.”

During Hurricane Harvey, operations at Port Houston were closed for about 10 days, as the storm dumped as much as 50 inches of rain in and around the area.

In September 2021, the Port of New Orleans was forced to shut down its container vessel operations during Ida, a destructive Category 4 storm that became the second-most damaging hurricane to make landfall in Louisiana on record, behind Hurricane Katrina in 2005. Hurricane Ida was responsible for about 90 deaths across the U.S.

Hurricane Ida knocked out power throughout the New Orleans area for several days between Aug. 30 and Sept. 4. While local officials did not call for a mandatory evacuation, some employees conducted operations while away from the port, Jessica Ragusa, Port of New Orleans spokeswoman, told FreightWaves.

“Safety of our employees was a top priority during Hurricane Ida,” Ragusa said. “Our designated essential staff reported to the port immediately while other essential staff who were able continued to work remotely to ensure business continuity.”

Ragusa said in the event of a storm, the Port of New Orleans works with its terminal operators, tenants and partners at the U.S. Coast Guard, Flood Protection Authority, and Army Corps of Engineers to ensure safety and secure cargo, rail and cruise operations. 

Ragusa said the port was able to resume limited breakbulk cargo and railroad operations about four days after closing. Container operations resumed after nine days.

“Though Hurricane Ida caused mass power outages throughout our region and closed the Lower Mississippi River to navigation, the port’s terminals and industrial real estate properties did not sustain major damage, due to their location within the $14 billion federal Hurricane & Storm Damage Risk Reduction System,” Ragusa said. “The river reopened just three days after Hurricane Ida made landfall.”

Emergency responders always prepare for disasters — even if there isn’t one

Emergency and disaster response isn’t just preparing for hurricanes and other major storms. It can be a daily and sometimes hourly job. 

Emergencies could encompass everything from fires on a container ship to a military chopper crashing near the Houston Ship Channel, as was the case in 2016.

“Safety is essential to everything we do,” David DeCamp, a spokesman for Crowley Maritime, told FreightWaves. “It’s not just a year-round job. It’s an hourly job. We operate in 36 countries and island territories, in ocean and land transportation, warehousing and port terminals. Safety is critical as a company of 7,000 people.”

Crowley is a privately owned and operated logistics, government, marine and energy solutions company headquartered in Jacksonville, Florida. 

Crowley boasts 19 terminals in the U.S., Caribbean and Latin America. The company also operates a fleet of 200 vessels, including container ships, roll-on, roll-off vessels, articulated tug barges, tugs and barges. Crowley also provides services to offshore energy installations, to operating and managing petroleum tank vessels.

Just like at Port Houston, Crowley officials said it takes a legion of personnel to get a facility or ship prepared for a hurricane or severe weather event. Since the company sports multiple terminals, as well as hundreds of ships, it could be dealing with several emergencies at any given time.

“When you’re in the middle of the ocean on a tanker, you’re the fire department. You’re the emergency response. You’re everything,” Hess said. “That kind of planning and prepping on the safety side of things has been ongoing throughout my career.”

Hess said it could also be that while one facility or ship at Crowley is seeing the end of a storm or emergency event, another facility or ship could just be at the beginning of another crisis.

“During Hurricane Irma, at one point we had 13 facilities in one level or another of the response,” he said. “Sometimes we’re in preparatory mode in some locations and in recovery mode at others at the very same time. So we’re actually bringing together those people so we can understand the effects rippling through the supply chain.”

Irma was a powerful hurricane that brought widespread destruction across Florida and parts of the Southeastern U.S. in September 2017. It caused about 134 deaths, including 92 people in the U.S.

Harrison said emergency preparedness training should be ongoing throughout the year for all employees, especially those in leadership roles.

“Safety leadership training for supervisors is important, so what that entails is building leaders in the company that have dedicated skills where you influence others to be safe,” Harrison said. “We do safety culture assessments every two years. We don’t just measure the safety culture as a whole. We go to different sites or even business units to say, ‘How is your culture when it comes to safety here? Do you have the right systems in place, and what does a little bit better look like?’ So [that way] we can address those and do continuous improvement.”

Click for more FreightWaves articles by Noi Mahoney.

More articles by Noi Mahoney

Mexico truckers break export record in August

Mexico’s biggest container port reopens after earthquake

Massive 7.7 earthquake strikes Mexico Pacific Coast region

Nissan steering imports through Port of Brunswick

The Georgia Ports Authority’s board on Tuesday agreed to spend $60 million on further development at the Colonel’s Island Terminal.

The Georgia Ports Authority announced Tuesday that Nissan North America has chosen the Port of Brunswick as a new point of entry to serve U.S. markets. 

Nissan North America joins two dozen other auto manufacturers at Colonel’s Island, according to the GPA, which said the 1,700-acre terminal provides immediate access to Interstate 95 and from there, I-10 and I-16. 

The GPA reported Tuesday that August roll-on/roll-off (ro-ro) volumes at the Port of Brunswick grew 3.3% year over year to 53,600 units. 

The GPA said to help accommodate new business, it has developed an additional 85 acres at the Port of Brunswick for storage. In addition, Wallenius Wilhelmsen Solutions is constructing three buildings to support its auto processing operations for Nissan and Infiniti. Those buildings are expected to be completed this fall. 

And the GPA’s board on Tuesday approved spending $60 million on additional buildings, property development and civil infrastructure to expand its ro-ro capacity at the Colonel’s Island Terminal. The new slate of projects comes in addition to $186.8 million in improvements the board approved in January and March, the GPA said. 

“With WWS expanding its presence to make Brunswick a hub port for its auto processing, combined with new customers such as Nissan coming onboard, Colonel’s Island Terminal is poised to become the nation’s premier gateway for vehicles and heavy machinery,” Joel Wooten, the GPA board chairman, said in a news release. “With the enormous asset of space, our facility provides ample room to take on new business with on-site auto processing for services such as accessory installation.”

The Port of Brunswick earlier this year received federal approval to add a fourth berth at Colonel’s Island to more efficiently accommodate vessels with a capacity to carry more than 7,000 vehicles.

The new berth will include a concrete deck and system of mooring dolphins extending ro-ro berthing space from 3,355 feet to 4,630 feet, the GPA said, adding that construction was expected to begin by the end of 2022 and take two years to complete. 

The GPA touts the Port of Brunswick as the second-busiest U.S. hub for ro-ro cargo, behind only Baltimore. The port moved 650,000 units of vehicles and heavy machinery in 2021, a 10% increase year over year. 

GPA paving way for more vehicles at Port of Brunswick

Port of Savannah clearing record volumes despite vessel backlog

Port of Savannah launches Navis terminal operating system

Click here for more American Shipper/FreightWaves stories by Senior Editor Kim Link-Wills.

How Hungary could stymie G-7 plan to cap Russia’s wartime windfall

The G-7 plan to squeeze Russia’s oil profits hinges on the EU revising its own sanctions — and those changes face opposition.

a photo of Russia currency; oil - G-7 sanctions loom

Sanctions targeting Russian oil exports go into effect in just 10 weeks, on Dec. 5. From a practical perspective, sanctions come into play sooner than that. Tankers can take up to a month to reposition for cargo loadings. Refineries need to plan for deliveries well in advance.

The G-7 sanctions plan, which would cap Russian oil export prices, faces a big risk even before it gets off the ground: It hinges on the European Union changing its own sanctions policy and enacting its own price cap to match the G-7’s.

To change the sanctions, the EU vote has to be unanimous. And it’s looking less likely this will happen anytime soon.

Bloomberg reported Monday that a price cap is not likely to be included in the seventh round of EU sanctions currently under discussion. Hungary and Cyprus are among those opposed, said Bloomberg.

This raises the risk that the tanker industry will face an unworkable morass of conflicting G7 and EU sanctions regimes in the months ahead.

If so, there could be a shortage of tankers able to obtain insurance for carriage of Russian cargoes. The very outcome the U.S. is scrambling to avoid could come to pass. Russian exports could fall too far and too fast, causing rising prices for American consumers.

EU sanctions went too far

On June 3, the EU adopted its sixth set of sanctions targeting Russia. The EU agreed to ban seaborne imports of Russian crude on Dec. 5 and Russian products on Feb. 5. In addition, EU companies would be banned from providing services for Russian exports of crude and products to non-EU countries after those two dates, respectively.

With over 90% of tankers insured by service providers in the U.K. and EU, the fear was that the EU sanctions went too far and would effectively block most Russian exports. U.S. officials addressed this concern while speaking at the Capital Link New York Maritime Forum on Wednesday.

“We think [EU sanctions] were a well-intentioned policy to reduce the Kremlin’s revenues in the context of the war, but in our view, it would meaningfully reduce the flow of Russian oil into the global market,” said Erik Van Nostrand, senior advisor for Russia/Ukraine policy at the Treasury Department’s Office of Economic Policy.

G-7 ‘relief valve’ to EU sanctions

To fix that perceived flaw, G-7 countries agreed on Sept. 7 to set a cap on the price of Russian oil exports

As with the EU plan, marine service providers in G-7 countries would be banned from facilitating Russian oil exports. However, the G-7 would allow its countries’ service providers — most importantly, U.K. marine insurers — to facilitate transport of Russian oil sold at or below a price cap set by the G-7.

“We view the price cap as an adjustment to the EU’s sixth sanctions package,” said Van Nostrand. “The goal is to allow oil to continue to flow. To keep energy affordable. But do so in a way that does not undermine the sixth sanctions’ goal of denying windfall profits to the Kremlin. What we’re doing mechanically is creating an exception to that ban on maritime services. The price cap is a relief valve for the sixth set of sanctions.”

What if EU doesn’t approve price cap?

But that relief valve won’t work properly unless EU sanctions are revised.

According to Michael Lieberman, assistant director for enforcement at the Office of Foreign Assets Control, “The idea is that the EU will adopt a cap similar to the G7. They will mirror each other.”

photo of G-7 ministers meeting to discuss Russia sanctions
G-7 finance ministers meet (Photo: AP Photo/Stefan Rousseau)

Van Nostrand said, “This will involve the reopening of the sixth set of sanctions. The exception for oil traded below the cap is the piece [of the EU sanctions] that needs to be changed.”

This is the exact proposal that’s now running into opposition from some EU members.

If the EU does not mirror the G-7 price cap by Dec. 5, crude-tanker cargoes that are “legal” under G-7 rules would run afoul of EU sanctions if service providers under EU jurisdiction were involved.

Most of the shipowner property and indemnity (P&I) insurance clubs are in the U.K., a member of the G-7, not the EU. But these P&I clubs are nonetheless exposed to EU sanctions.

According to guidance released by members of the International Group (IG) of P&I clubs, “Most of the clubs that comprise the IG are subject to the jurisdiction of the EU. All IG clubs, including those that are domiciled outside the territory of the EU, rely on a reinsurance program that is heavily dependent on the participation of reinsurers that are domiciled with the EU.”

Thus, U.K. marine insurers would face coverage restraints until EU sanctions are brought in line with the G-7’s. Because of the EU’s unanimous-vote rule, a single country such as Hungary — whose leader Viktor Orban is highly critical of Russian sanctions and has a contentious relationship with other EU officials — could theoretically stymie the G-7’s plan by refusing to back an EU price cap.  

Click for more articles by Greg Miller 

Florida ports and railroads eye Hurricane Ian

The hurricane could hit central Florida later this week, causing Tampa-area port facilities to brace for Ian’s impact.

An oil tanker vessels sails into a harbor. A city landscape of tall buildings is in the background.

The ports along Florida’s Gulf-facing coastline and eastern U.S. freight railroads are taking steps to safeguard their operations ahead of Hurricane Ian, which is expected to reach west central Florida sometime midweek.

“Port Tampa Bay is coordinating closely with federal, state and local agencies, as well as the maritime community to prepare for and respond to potential impacts of Hurricane Ian,” Port Tampa Bay said in a Sunday notice. “As always, the Port’s priorities are safety of life, protection of the environment, and maritime commence resiliency.”

The port has initiated its comprehensive emergency management plan, and it has been receiving daily briefings from the National Weather Service since Friday. The port has begun to secure waterfront facilities and dock areas. 

The Port Heavy Weather Advisory Group, which consists of local maritime entities, has also been activated, and the group will work with the U.S. Coast Guard to monitor potential impacts to Port Tampa Bay and the waterways. It has created queuing for vessels that weigh 500 gross tons and above to depart Tampa Bay ahead of the hurricane. 

SeaPort Manatee said Monday that the Coast Guard declared port condition Yankee for the region, meaning that gale-force winds of 34 to 47 knots are possible within the next 24 hours due to Hurricane Ian approaching Florida. 

SeaPort Manatee is prohibiting inbound ship traffic, although the port remains open to shoreside traffic. 

The Coast Guard has extended Hurricane Port Condition Whiskey through Monday afternoon at JAXPORT in Northeast Florida along the Atlantic Coast. Under port condition whiskey, ports and other facilities remain open for commercial operations. 

Officials for Jacksonville, Florida-based Crowley Maritime, which operates a terminal at JAXPORT, said they are closely monitoring new developments with Hurricane Ian.

“Right now we’re monitoring the National Weather Service and we are adjusting what we’re doing here at the port based on what the wind profiles are looking like,” Scott Hess, senior director of health, safety, security, environment and sustainability at Crowley Maritime, told FreightWaves. “We’re going through our normal storm preps just as if something was coming up the Atlantic, if it crosses out of the Gulf of Mexico, we approach it in the very same way.”

CSX (NASDAQ: CSX) is keeping its eye on the storm, spokesperson Sheriee Bowman told FreightWaves.

“CSX is closely monitoring Hurricane Ian as it advances toward the Gulf Coast. Precautionary measures for protecting employees, rail traffic and infrastructure are being taken ahead of the expected arrival of the storm,” Bowman said. 

CSX will post customer advisory updates on its website, she said.

In a Friday service bulletin, CSX said it would continue to track the storm as it evolves, telling customers to monitor customer advisories and intermodal-specific real-time service advisories for information on potential impacts.

Norfolk Southern (NYSE: NSC) told FreightWaves that while its Florida operations are fairly limited, it is monitoring the storm for potential paths.

Subscribe to FreightWaves’ e-newsletters and get the latest insights on freight right in your inbox.

Click here for more FreightWaves articles by Joanna Marsh.

Ports of Halifax, Saint John brace for approaching Fiona

The ports of Halifax and Saint John are taking steps to protect operations as Hurricane Fiona approaches Atlantic Canada.

A lighthouse at a pier's edge stands watch over a harbor.

Hurricane Fiona continues its march northward up the Atlantic Ocean, and the Canadian ports of Halifax and Saint John are preparing for its arrival.

“We are actively monitoring the forecast related to Hurricane Fiona and communicating with our partners. Our port community is well equipped to make operational decisions which will prioritize health and safety of our waterfront workers and visitors,” Port Saint John spokesperson Jane Burchill told FreightWaves. Port Saint John is in New Brunswick. 

The cruise schedule will continue to change with cancellations and additions, she said.

The Port of Halifax in Nova Scotia said Friday morning that vessel movements would be suspended as of 3 p.m. local time Friday and will resume when weather conditions allow. The port said pilot and terminal operations could be affected Friday and Saturday, and it recommended checking Environment Canada’s website for the most up-to-date forecast.

Source: National Oceanic and Atmospheric Administration

A hurricane wind warning is currently in effect in Halifax, with wind speeds north of 28 mph tonight before reaching greater than 75 mph around midnight, according to Environment Canada.

The National Hurricane Center of the U.S. National Oceanic and Atmospheric Association said the brunt tropical storm-force winds could reach Atlantic Canada at roughly 8 p.m. Friday. 

“Fiona is expected to affect portions of Atlantic Canada as a powerful hurricane-force cyclone tonight and Saturday, and significant impacts from high winds, storm surge, and heavy rainfall are expected. Hurricane and tropical storm warnings are in effect for much of Atlantic Canada,” the National Hurricane Center said Friday morning

The forecast includes large swells generated by Fiona, which are expected to cause life-threatening surface and rip current conditions, the National Hurricane Center added. 

Subscribe to FreightWaves’ e-newsletters and get the latest insights on freight right in your inbox.

Click here for more FreightWaves articles by Joanna Marsh.

West Coast ports sink to lowest share of US imports since early 1980s

East and Gulf coast ports handled more volume than ever before in August, pulling far ahead of West Coast rivals.

photo of a container port crane

The West Coast was the destination of choice for Asian exports in the initial stage of the COVID buying boom — before container-ship queues stymied the ports. 

Since then, volumes have been redirected to the East and Gulf Coasts due to fears of both California congestion and West Coast port labor strife. There has been a major shift in cargo flows. East and Gulf coast ports now boast significantly more imports than West Coast ports.

Best month ever for East/Gulf coast ports

Data from McCown Container Volume Observer released Thursday confirms that U.S. imports remain near all-time highs. Imports to the top 10 ports totaled 2,165,939 TEUs in August, the fifth-highest monthly tally on record. August was flat year on year (y/y) and up 3% versus July.

The West Coast ports’ share of the total sank to 45%. That’s a nine-point swing from February 2021, when the West Coast boasted a 54% share. According to John McCown, author of the Container Volume Observer, August marked the West Coast ports’ lowest share of U.S. imports “since at least the early 1980s.” 

chart showing volume of cargo to West Coast ports
(Chart: McCown Container Volume Observer)

Imports to the top West Coast ports totaled 978,844 TEUs in August, down 11.5% y/y, weighed by a 17% plunge at the Port of Los Angeles (partially driven by cargo switching to Long Beach due to a union issue at one LA terminal).

Imports to the top East and Gulf coast ports totaled 1,187,095 TEUs last month, up 12% y/y. These ports “had a blowout month with their largest volumes ever,” said McCown. 

Import gains were driven by Savannah, Georgia ( up 20.4% y/y), Houston (up 12.7%), Norfolk, Virginia (up 11.4%), and New York/New Jersey (up 10.5%).

To analyze the coastal shift over time, McCown looked at the three-month trailing average of the y/y change by coastline. This data shows the latest shift toward the East and Gulf coasts began in the second quarter of 2021. Upside versus the West Coast has remained high throughout 2022. As of August, the three-month y/y change for the West Coast was minus-5.1% compared to plus-8.5% for the East/Gulf coast ports.

chart showing trends for West Coast vs East/Gulf Coast ports
(Chart: McCown Container Volume Observer)

Port queues easing

Including all three coasts, there was a peak of just over 150 container ships waiting off North America in January — mostly off the West Coast — and a similar number in late July, this time mostly off the East and Gulf coasts.

The biggest queue in recent months has been off Savannah, Georgia, with over 40 container ships waiting on some days. On Sept. 13, Georgia Ports Authority Executive Director Griff Lynch said the number of waiting ships would “dwindle” over the following six weeks.

American Shipper surveyed ship-position data from MarineTraffic and official California queue lists on Thursday morning. The survey found that the North American queue total has pulled back to 116 ships, 22% below highs in late July.

Savannah was down from its peak but still had the largest queue, with 29 ships waiting. Houston has not improved, with 23 container vessels still offshore. The other recent hot spot — New York/New Jersey — was down to 13 ships on Thursday morning; it had recently been in the 20s. Meanwhile, the queue off Virginia — composed of ships waiting to get into Norfolk or Baltimore — had worsened and was up to 13 ships.

Altogether, only 24% of waiting vessels were off the West Coast on Thursday morning, highlighting the extent that shipping lines have shifted to the other coasts.

Click for more articles by Greg Miller 

Over the past month (through Tuesday) Customs data shows that US containerized imports have actually increased versus the same period in 2021 (Chart: FreightWaves SONAR)

FreightWaves Classics/Leaders: Garcia was a trailblazer in the Coast Guard

FreightWaves Classics celebrates National Hispanic Heritage Month with a profile of Henry Garcia, the first Hispanic-American officer in the USCG.

The USCG Cutter Campbell. (Photo: atlanticarea.uscg.mil)

FreightWaves Classics is sponsored by Old Dominion Freight Line. Click to find out how we can help your business keep its promises.

National Hispanic Heritage Month

National Hispanic Heritage Month is observed annually from September 15 to October 15. It celebrates “the histories, cultures and contributions of American citizens whose ancestors came from Spain, Mexico, the Caribbean and Central and South America.”

Hispanic Heritage Week began in 1968 under President Lyndon Johnson and was expanded by President Ronald Reagan in 1988 to cover a 30-day period beginning on September 15 and ending on October 15. It was enacted into law on August 17, 1988. 

September 15 is significant because it is the anniversary of independence for Latin American countries Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. In addition, Mexico and Chile celebrate their independence days on September 16 and September 18, respectively. Also, Columbus Day which is October 12, falls within this 30-day period.

FreightWaves Classics also celebrates National Hispanic Heritage Month. A recent article profiled Federico Peña, the first Hispanic-American to serve as U.S. Secretary of Transportation. 

Henry Frederick Garcia

Henry Frederick Garcia was born in Morro Castle, Puerto Rico, on February 17, 1903. His father was a career U.S. Army officer, while his younger brother would rise to be a rear admiral in the U.S. Navy. Due to his father’s service, Garcia received an appointment to the United States Naval Academy, from which he graduated in 1924. He accepted a commission in the U.S. Army,  serving until 1928, when he accepted a commission in the United States Coast Guard (USCG) – becoming the first Hispanic-American officer in the USCG. 

Midshipman Henry Frederick Garcia in the yearbook of the United States Naval Academy. (Photo: U.S. Navy)
Midshipman Henry Frederick Garcia in the yearbook of the United States Naval Academy. (Photo: U.S. Navy)

Garcia’s USCG career 

On August 4, 1790, President George Washington signed the Tariff Act, which authorized the Revenue Cutter Service and the construction of 10 vessels (known as “cutters” to enforce federal tariff and trade laws and to prevent smuggling). 

In 1915 the Revenue Cutter Service was merged with the U.S. Life-Saving Service, and was renamed the Coast Guard. It is the U.S. maritime service dedicated to saving life at sea and enforcing the nation’s maritime laws.

USCGC Shoshone underway, passing under the Golden Gate Bridge prior to World War II. (Photo: USCG)
USCGC Shoshone underway, passing under the Golden Gate Bridge prior to World War II. (Photo: USCG)

In 1936, Garcia was assigned to be the engineering officer aboard the Cutter Shoshone. The Shoshone was part of aviator Amelia Earhart’s attempt to circumnavigate the globe. In March 1937, Shoshone sailed from Oakland, California, to the South Pacific. It offloaded fuel that would have been vital to Earhart’s landing at Howland Island. Had Earhart reached Howland, the stores brought by Shoshone would have helped Earhart to continue her historic flight. Unfortunately, Earhart and her navigator Fred Noonan disappeared over the central Pacific Ocean near Howland Island. 

Amelia Earhart at the controls of an Electra. (Photo: Everett Collection/FLYING magazine)
Amelia Earhart at the controls of the Electra. (Photo: Everett Collection/FLYING magazine)

Promoted to Lieutenant, Garcia made history in 1939 as the first Hispanic American to command a Coast Guard cutter – the Morris, which was stationed in Seward, Alaska. 

In March 1939, he led a rescue mission for a group of trappers. Lost and presumed dead, the survivors subsisted on rotten fish and were nearly incapacitated by the time they were found. The Morris and its crew searched for weeks for the missing men, locating them on Tugidak Island. However, before an evacuation could occur, Garcia and his crew had to keep the Morris afloat during a 48-hour gale. Despite the weather and high seas, Garcia launched the cutter’s small boat, rescuing the trappers before they died.

(Image: Alaska Volcano Observatory)
(Image: Alaska Volcano Observatory)

The Morris was then dispatched to oversee the evacuation of residents near the Mount Veniaminof eruption. “Garcia and his crew stood by for a few weeks to monitor the fishing fleet, while the mountain spewed fire and ash 20,000 feet into the air.” On June 17, 1939, the main eruption occurred and the Morris put in at Perryville, Alaska, to evacuate the town’s remaining people. However, they refused to leave, so the Morris sailed for Chignki and maintained constant radio contact with the people in Perryville.

Garcia and the crew of the Morris then rescued a vessel in distress. Dr. Homer Flint Kellems headed an expedition to find an ice-free Northwest Passage, but was forced to radio a distress call after making its way north for two weeks. The Pandora, the expedition’s schooner, struck a rock three miles north of St. Elias and was breaking up. The Morris steamed from Seward to find the stricken vessel. When the Coast Guard cutter arrived, Garcia and his crew rescued the shipwrecked expedition from Kayok Island.

The USCG Cutter Morris. (Photo: USCG)
The USCG Cutter Morris. (Photo: USCG)

During World War II Garcia served on assignments on both the East and West coasts. In Charleston, South Carolina, Garcia served as executive officer of Base Charleston. Following a presidential order to seize all Axis Powers’ shipping, Garcia took part in the seizure of the Italian cargo freighter Villaperosa in March 1941. The crew of the Villaperosa had sabotaged their ship, seeking to ensure that it would not be of use to the U.S. 

Garcia’s team secured the ship and its crew and then collected evidence against the saboteurs. The crew was found guilty of sabotage and sentenced to seven years. Their ship was towed to New York, repaired, and put back into service for the U.S.

Now a Lt. Commander, Garcia was transferred to Baltimore shortly after the attack on Pearl Harbor. In Baltimore, Garcia served with the Military Sea Transportation Service until he was reassigned to the Port Los Angeles. 

A SPARS recruiting poster. (Image: U.S. National Archives and Records Administration)
A SPARS recruiting poster.
(Image: U.S. National Archives and Records Administration)

As Assistant Captain of the Port, Garcia was responsible for the port’s security. Garcia oversaw the creation of units maintained and led by Semper Paratus (Always Ready). Known as SPARS,  Semper Paratus was a female volunteer force similar to WASPs and WACs. Garcia was the ranking Coast Guard officer in Los Angeles during the last years of the war. 

At that time and for unknown reasons, Henry Frederick Garcia changed his name to Montegue Frederick Garfield.

Garfield was then transferred to Galveston, Texas, becoming the first minority commanding officer of a Navy patrol frigate, the Coast Guard-manned USS Annapolis. In September 1945, after serving as an escort for several convoys to Oran, Algeria, the USS Annapolis was shifted to Seattle. 

USS Annapolis responding to the burning SS Prince George in Ketchikan, Alaska, signed by Cmdr. Garfield. (Photo: National Archives)
USS Annapolis responding to the burning SS Prince George in Ketchikan, Alaska, signed by Cmdr. Garfield. (Photo: National Archives)

While on patrol, the Annapolis was dispatched to Ketchikan, Alaska, to rescue the passengers and crew of the SS Prince George. Arriving on scene, now-Commander Garfield and the crew of the Annapolis fought a fire consuming the Prince George. The crew of the Annapolis, under Garfield’s leadership, fought the fire while rescuing the 113 crew and passengers. The patrol frigate then towed the Prince George to Gravina Island where it was beached and later scrapped.

Garfield was transferred again, finishing his time aboard ships as the commanding officer of the high-endurance cutter Campbell, whose home port was Charleston. The Campbell carried a mascot – “Sinbad,” Chief Petty Officer-Dog. Garfield saw to it that Chief Sinbad received a hero’s welcome upon the Campbell’s arrival in New York in January 1946. Chief Sinbad was even “interviewed” by radio station WTMA in the wardroom of the Campbell.

Sinbad and some of his shipmates on board the cutter Campbell in the North Atlantic in 1943. (Photo: USCGC Campbell Association)
Sinbad and some of his shipmates on board the cutter Campbell in the North Atlantic in 1943.
(Photo: USCGC Campbell Association)

After finishing his sea career, Garfield was named Chief of Public Affairs for the Coast Guard’s Eighth District in New Orleans. In 1956 Garfield retired with the rank of captain after serving five years as the Chief of Intelligence for the Coast Guard’s 12th District in San Francisco. 

A minority trailblazer

Garcia/Garfield was the first minority officer to serve in the modern Coast Guard. “Garfield was the first Hispanic-American officer in the Coast Guard at every rank from ensign to captain.” In addition, he was the first Hispanic-American officer to serve in a variety of ashore and afloat assignments, including the first to command a medium-endurance cutter, high-endurance cutter and Coast Guard-manned Navy vessel. 

After retiring, Garfield moved to San Diego where he was in the real estate business. He died there at the age of 63. 

FreightWaves Classics thanks the U.S. Coast Guard and other sources for information and photos that contributed to this article.

FreightWaves SONAR data revealed global recession months before FedEx’s earnings

FreightWaves founder and CEO Craig Fuller outlines how FreightWaves SONAR pointed to the global freight recession months ago.

A container ship stacked with containers

In a note last Friday, September 16, J.P. Morgan reminded us that back in June it warned about a concerning drop in container volume out of China, based on FreightWaves SONAR Container Atlas data. 

Part of the J.P. Morgan note.
Part of the J.P. Morgan note.

The firm titled its June 3 report “Watching the China Freight Wave,” which covered the slowdown in container markets and forewarned about a slowing U.S. domestic freight market.  

Using the same data, on June 7, FreightWaves wrote an article titled “U.S. import demand is dropping off a cliff.” We saw container flows out of China to the U.S. drop by 36% between May 24 and June 7, 2022. 

The Port of Shanghai. (Photo: Shutterstock)
The Port of Shanghai. (Photo: Shutterstock)

SONAR’s high-frequency supply chain data tracks the point-of-origin loadings (i.e. ports in China) and comes from container booking platforms that represent 70%+ of inbound containers to North America.

FreightWaves did get one thing wrong – we underestimated how long it would take the volume drop to show up at U.S. ports. We expected it to be apparent by July, but the backlog of containers was so massive that it wasn’t until August that the data was clear (Port of Los Angeles down 17% year-over-year). 

At the time of the FreightWaves article, Stifel issued a scathing report of FreightWaves’ analysis. The “global wealth management and investment banking company” confused SONAR Point of Origin bookings data with Customs clearing data in the U.S. The difference is SONAR data measures when freight is loaded at its destination port, while U.S. Customs and Border Protection measures when it clears U.S. ports. 

U.S. Customers and Border Protection officers at the Port of New York/Newark inspect an incoming shipment. (Photo: U.S. Customs and Border Protection)
U.S. Customers and Border Protection officers at the Port of New York/Newark inspect an incoming shipment.
(Photo: U.S. Customs and Border Protection)

SONAR’s data (tracking container loadings out of China) will always lead U.S. Customs data by at least six weeks. This time, the data was stretched even more due to the container backlog, and took about 60+ days to show up.

There is no doubt that container volume is slowing quickly. Ocean container spot rates from China to the U.S. West Coast have dropped from $9,600 to $3,800 since our June report to today, a reflection of slowing demand. And by the way, right now is supposed to be the peak season for ocean containers.

There are signs on the ground that things are much worse in China. China Beige Book, a provider of economic data from China that isn’t filtered or manipulated by the Chinese government, has been warning about a much bigger slowdown in China than what official reports have suggested.

In recent weeks, SONAR’s Container Atlas has continued to show signs that global freight markets are continuing to weaken. Since September 1,  container loadings bound for the U.S. have dropped by another one-third and now are below levels last seen in the summer of 2019. 

FedEx’s warnings about a global recession are in large part based on what the global company is experiencing out of Asia. As its CEO stated, FedEx has seen a week-to-week volume slowdown since its investor day in late June.

FedEx has warned of a global recession. (Photo: Jim Allen/FreightWaves)
FedEx has warned of a global recession. (Photo: Jim Allen/FreightWaves)

With over 75% of container imports related to consumer goods, a slowdown should not be a shock. In fact, there have been a number of signs since March about a slowdown in the freight market.

On March 31, 2022, I wrote “Why I believe a freight recession is imminent,” based on the significant slowdown in U.S. trucking market conditions. This was the first warning that something was materially wrong in the 2022 freight market. 

Freight markets are leading indicators of economic activity, often by months. The reason is that upstream suppliers need to source raw materials months before goods are manufactured and retailers have to ship products from wholesalers months before they end up in stores.

High-frequency freight market data enables you to see the goods economy months before everyone else. FreightWaves pioneered these datasets over the past several years, and we are just starting to learn their full ability in helping to track the massively opaque global goods economy. 

This will become far more important in the future as the world shifts into a multipolar world, with competing geopolitical interests, disruptive events, and supply chains that prioritize resiliency over lowest costs.

Atlantic Canada braces for Hurricane Fiona

The ports of Halifax and Saint John could be affected by Hurricane Fiona.

The ports of Halifax and Saint John are in the path of Hurricane Fiona, which could reach Atlantic Canada Friday evening.

Fiona is traveling northward off the East Coast in the Atlantic Ocean after knocking power out in Puerto Rico on Tuesday. The storm has grown to a Category 4 hurricane, with wind speeds as high as 130 mph close to its eye, according to The Washington Post.

“Fiona is expected to affect portions of Atlantic Canada as a powerful hurricane-force cyclone late Friday and Saturday, and could produce significant impacts from high winds, storm surge, and heavy rainfall,” said a Thursday notice from the National Hurricane Center of the National Oceanic and Atmospheric Administration.

The Port of Halifax said pilot and terminal operations could be affected on Friday and Saturday. The port recommended website visitors go to Environment Canada’s website for the most up-to-date forecast.

FreightWaves reached out to Port Saint John for comment.

Halifax is in Nova Scotia, while Saint John is in New Brunswick.

Subscribe to FreightWaves’ e-newsletters and get the latest insights on freight right in your inbox.

Click here for more FreightWaves articles by Joanna Marsh.