Long Beach sets record but East, Gulf Coast ports’ gains bigger

According to maritime expert John McCown, the U.S. ports with the strongest April performance were Charleston, South Carolina; Houston; and New York/New Jersey.

“Cargo continues to move at a record-setting pace and may not slow down anytime soon,” according to Mario Cordero, executive director of the Port of Long Beach. 

The port on California’s San Pedro Bay recorded its busiest April ever. Its neighbor, the Port of Los Angeles, had the second-busiest April in its history even though it posted a year-over-year cargo volume decrease. But the strongest performances in April took place at ports on the Gulf and East coasts.

The Port of Long Beach last month moved 820,718 twenty-foot equivalent units, up 10% from the previous record set in April 2021. Imports increased 9.2% year-over-year to 400,803 TEUs, while exports dipped 1.8% to 121,876 TEUs.

FreightWaves’ SONAR shows a monthly view of TEUs cleared through U.S. Customs on a seven-day average.

Empty containers moved saw the biggest increase, 16.9% year-over-year, to 298,039 TEUs. 

The port handled 3,281,377 TEUs during the first four months of 2022, a 5.1% increase from the same period in 2021.

Cordero said the port is not anticipating any lazy days of summer. 

“We are preparing for a likely summertime surge as China recovers from an extended shutdown due to COVID-19,” he said in the port’s volumes report. “Shippers are quickly moving imports and empties from the docks, terminals are staying open longer and we are working to finalize our new Supply Chain Information Highway data-tracking solution.” 

Trans-Pacific flows steady

Gene Seroka, executive director of the Port of LA, said in a press release Tuesday that trans-Pacific trade “has held steady” despite the COVID lockdowns in China. 

The Port of LA handled 887,357 TEUs in April. The port’s busiest April occurred last year, when it moved 946,966 TEUs.

FreightWaves’ latest product, Container Atlas, shows ocean volumes from March through May 1. 

The more than 3.5 million TEUs moved in the first four months of 2022 at the Port of LA is 1% ahead of last year’s record pace. 

The port did report declines. Loaded imports in April totaled 456,670 TEUs, a 6.8% decrease year-over-year. Loaded exports totaled 99,878 TEUs, a 12.7% decrease from April 2021. 

While the number of empty containers moved at the Port of Long Beach increased by more than 15%, the Port of LA saw a 3.4% year-over-year decrease, handling 330,810 TEUs of empties. 

Cordero’s statement about cargo moving at a record-setting pace is particularly applicable for ports outside California. The Georgia Ports Authority reported Tuesday that its April container volumes were up 6.2% year-over-year and that it had the third-busiest month in its history. South Carolina Ports has set cargo records for 14 consecutive months. April was the second-busiest month in the history of the Port of Virginia in Norfolk. And Port Houston reported Tuesday that it had its busiest April ever, with the 334,493 TEUs handled a 21% year-over-year increase. 

McCown’s take

“The 10 largest U.S. ports saw inbound box volume grow 7.1% in April, an increase from the 3.5% gain in March but below February’s 13.7% gain,” maritime expert John McCown wrote in The McCown Report.  

April’s overall inbound volume at the top 10 ports of 2,189,744 TEUs was the third-highest total ever and just 1.8% below the record 2,230,919 TEUs set just a month earlier, McCown said. 

“April was the 11th straight month in which the year-over-year percent change in volume at East/Gulf Coast ports outperformed West Coast ports,” he noted. “In April, there was a 22.1 percentage-point coastal gap resulting from an 18.7% gain at East/Gulf Coast ports and a 3.4% decline at West Coast ports. This is the fourth-highest monthly gap ever in those measures and above the average 16.6 percentage-point difference over the 11-month period.”

He attributed the stronger relative performance of ports on the Gulf and East coasts to the initial pandemic volume surge disproportionately benefiting West Coast ports and impacting comparisons; shippers rerouting cargo to “avoid the widely reported congestion” in LA and Long Beach; and lower linehaul costs from the Gulf and East coasts compared to cross-country intermodal service from the West Coast. 

The McCown Report covers volumes at the top U.S. ports. (Chart: John McCown)

Shanghai volume redirected

April was strong at U.S. ports because China’s total container volume was down only 2.5%, McCown pointed out. 

“As a result of the lockdown in Shanghai related to a COVID variant, the Port of Shanghai, the largest container port in the world, saw a 25% reduction in its volume in April. However, with seven of the 10 largest container ports in the world in China, that volume was redirected,” he explained. 

According to McCown, the U.S. ports with the strongest April performance were Charleston, South Carolina, up 34%; Houston, up 26.5%; and New York/New Jersey, up 22.4%. 

“The weakest performance in April came in at Seattle/Tacoma, down 20.1%; Oakland, down 15.8%; and Los Angeles, down 6.2%,” he wrote. 

McCown forecast May’s numbers “will likely show an overall decline as it will be measured against the busiest-ever month for West Coast ports in May 2021.” 

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

U.S. Container Imports Jump in April as Coastal Shift Continues

By Mike Wackett (The Loadstar) – The seven-week Covid lockdown in Shanghai, prompting carriers to blank a third of export sailings on the Asia-Europe and transpacific tradelanes, is creating a lull…

By Mike Wackett (The Loadstar) – The seven-week Covid lockdown in Shanghai, prompting carriers to blank a third of export sailings on the Asia-Europe and transpacific tradelanes, is creating a lull...

Port of Long Beach Continues Record-Setting Streak and Warns of Cargo Surge When China Reopens

The Port of Long Beach set another new single-month record in April as the port continues to clear marine terminals of cargo ahead an expected new wave of imports in…

The Port of Long Beach set another new single-month record in April as the port continues to clear marine terminals of cargo ahead an expected new wave of imports in...

China lockdowns are not causing shipping chaos, say liner CEOs

China COVID lockdowns container shipping‘Right now, we don’t see a huge buildup of volumes because of the closedown in Shanghai,’ reports Maersk CEO Soren Skou.

China COVID lockdowns container shipping

It was predicted that China lockdowns would cause container shipping havoc. Six weeks into Shanghai lockdowns, it still hasn’t happened. Two liner CEOs — Maersk’s Soren Skou and Matson’s Matt Cox — explained why.

“The port [of Shanghai] is open and operating,” said Skou on Wednesday’s quarterly earnings call. Trucking and warehouse disruptions “are slowing things down somewhat and we are seeing an impact on our volumes out of China, but probably less than we would have expected.

“The purchase orders that our customers have issued in China don’t disappear because we have [a lockdown] so obviously they will come later. But right now, we don’t see a huge buildup of volumes because of the closedown in Shanghai.”

Cox reported during his company’s earnings call Tuesday that “the impact to Matson’s China operations has been minimal. Our terminals are receiving freight and managing empties and our ships are departing Ningbo and Shanghai on time.”

Capacity reallocated after China lockdowns

Some Matson customers have switched departures from Shanghai to neighboring Ningbo and a few have canceled bookings, “but those spots were filled rather quickly,” said Cox. “The bottom line is that Matson’s vessels are sailing full from China.” Not just throughout Q1 2022, but through April as well.

Cox said that some other shipping lines are omitting Shanghai calls and diverting to other ports. “Some carriers and customers shifted to Ningbo. But a number of carriers canceled their sailing from Shanghai [or Ningbo] and went to Busan [Korea] or other Asian origin ports and reallocated that capacity to other markets.”

The overall shipping impact of the Shanghai lockdown, according to Cox, is “a reduction of capacity [out of Shanghai] … largely filled by other load ports for the other carriers.”

Data from project44 confirms a lack of disruption to export operations within the Port of Shanghai. It shows that average wait time for export containers at the Port of Shanghai bound for destinations like the U.S. has actually decreased during the lockdown. In the last week of April, it was down 43% year on year to 2.02 days. Wait time for import containers has risen during the lockdown (due to a shortfall of truck transport inland) but this indicator retreated 15% in the last week of April versus the week before, to 10.75 days

Blue line = number of waiting days for import containers. Purple line = export containers. Dotted red line = lockdown period. Chart: FreightWaves SONAR (To learn more about FreightWaves SONAR, click here.)

Port congestion outlook

When China’s lockdowns ease, Cox expects the delayed cargoes to enter the trans-Pacific network and cause the queue of ships waiting for berths in Los Angeles/Long Beach to rise higher again.

“Some of our customers have indicated recently that they have a significant production backlog from the recent supply chain challenges, on the order of months of freight. This will take time to sort itself out, particularly since this will coincide with the traditional summer peak season.”

There were 34 container ships waiting for Los Angeles/Long Beach berths on Tuesday, according to the Marine Exchange of Southern California. That’s just one shy of the lowest number of ships waiting this year, but it’s still more than double the queue size at this time last year.

Chart: American Shipper based on data from Marine Exchange of Southern California

Cox believes Chinese lockdowns have “caused a temporary reduction in the number of ships waiting. When all that comes back online, I think we’ll see the backlog increase, together with the traditional peak season as we start to move into that.”

Skou pointed out that on a global basis, congestion is already very high — even before the U.S. peak season begins and lockdown-delayed China freight hits the water.

“The question highest on the minds of those involved in global logistics is, of course, when we will see a normalization of the extraordinary market situation we have experienced since the beginning of the pandemic,” said Skou.

“Unfortunately, this quarter [Q1 2022] didn’t bring us much closer to normalization. In fact, the spread of omicron in China [makes the] timing very difficult to predict.

“Somewhere between 10% and 12% of global ocean shipping capacity is tied up in port congestion. We believe that’s actually an increase from earlier this year. What we’ve seen happen is that the port congestion has spread from the U.S. West Coast to the East Coast and now also to parts of China.”

Earnings roundup:

Both Matson and Maersk pre-reported earnings prior to their full quarterly earnings releases.

Matson (NYSE: MATX) is a niche carrier that offers domestic services to Alaska, Hawaii and Guam in addition to China-U.S. services. Its ocean transport revenues rose 68% year on year, to $943.9 million in Q1 2022. Net income was $339.2 million, up 289% from $87.2 million in Q1 2021.

The Maersk group, which owns the world’s second largest ocean carrier, reported net income of $6.8 billion for Q1 2022 compared to $2.7 billion in Q1 2021. Group earnings before interest, taxes, depreciation and amortization came in at an all-time high $9.2 billion.

And the current quarter looks even better. Maersk CFO Patrick Jany said on the conference call that Q2 2022 operational performance is “as strong” as Q1 2022. But in the first quarter, Maersk took a $718 million hit due to the wind down of its Russia business after the invasion of Ukraine. “That won’t recur, therefore Q2 should be mathematically better than Q1,” said Jany.

Click for more articles by Greg Miller 

Port of Long Beach Completes Project Boosting Rail Capacity

The Port of Long Beach has completed construction of a new rail project which it says will increase efficiency of goods movement and reduce congestion on local roadways by shifting…

The Port of Long Beach has completed construction of a new rail project which it says will increase efficiency of goods movement and reduce congestion on local roadways by shifting...

Port of Long Beach on-dock rail facility moves closer to construction

An aerial view of a port near a body of water.The U.S. Maritime Administration issued a final environmental impact statement for the Pier B on-dock rail facility at Long Beach and approved the project.

An aerial view of a port near a body of water.

The U.S. Maritime Administration (MarAd) has issued a final environmental impact statement for the Port of Long Beach’s Pier B on-dock rail facility, bringing the planned project one step closer to fruition.

MarAd released the 382-page statement with its approval for the $1.5 billion project, which the Port of Long Beach describes as the centerpiece of its rail improvement program, on Friday.

“Simply put, the Pier B on-dock rail support facility will move cargo faster and with fewer environmental impacts,” said Mario Cordero, Port of Long Beach executive director, in a Monday release.

The project aims to improve the flow of cargo by enabling rail to move containers to and from marine terminals at the port. The facility will be located southwest of Anaheim Street and the 710 Freeway.

“The Port of Long Beach is a gateway for $200 billion in job-generating trade each year,” said  Steven Neal, Long Beach Harbor Commission president. “This project will help cargo move more efficiently, and it’s vital to maintaining our competitiveness and meeting our environmental goals.”

This approval comes on top of a $52.3 million grant that the port received from MarAd in late December for the on-dock rail facility. The port expects phase 1 construction to be completed in 2025, with full completion targeted in 2032. 

The phase 1 construction will double the capacity of the existing Pier B rail yard. 

According to the Port of Long Beach’s promotional video for the Pier B on-dock rail project, the support facility would enable the configuration of freight trains as long as 2 miles. Having the facility would also increase cargo movement in and out of the port by rail from 28% to 35%. 

As described in the environmental impact statement, the Pier B rail yard would be the only rail-serving facility within the entire San Pedro Bay ports complex that can assist the on-dock terminals with the task of assembling trains and dispatching them onto the Alameda Corridor and then to the Class I railroad main lines. 

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Click here for more FreightWaves articles by Joanna Marsh.

Will Long Beach’s sunny spring be followed by stormy summer?

Mario Cordero, Port of Long Beach executive director, says there have been “notable improvements across the supply chain,” but lockdowns in China could change that.

The Port of Long Beach reported its busiest March ever and “the most active quarter on record as long-dwelling cargo continued to move out of marine terminals.”

The port moved 864,156 twenty-foot equivalent units last month, up 2.7% from the previous record set in March 2021. Imports increased 4.7% year-over-year to 427,280 TEUs, while exports declined 18.3% to 114,185 TEUs. Empty containers “jumped” 10% to 321,691 TEUs, the port said in Thursday’s announcement. 

The Port of Long Beach said March typically is a slower month, but this year was exceptionally busy amid efforts to clear cargo from the docks and reduce the number of vessels waiting to berth. The number of ships waiting in San Pedro Bay to berth at either Los Angeles or Long Beach steadily declined from mid-February to the end of March, according to data from Marine Exchange of Southern California. 

However — and it’s a big however — the ports could be cleaning up in preparation for a whole lot more company. American Shipper’s Eric Kulisch reported Friday that the breather from West Coast port congestion likely will be followed by a tsunami of deferred cargo once COVID-related lockdowns in China are lifted.

“The cargo volume will far exceed the handling capability of the ports, with containers jamming up terminals faster than they can be transferred to inland transport and pushing vessels into long queues at sea,” Kulisch wrote. 

During the first quarter of 2022, the Port of Long Beach handled 2.46 million TEUs, a 3.6% increase from Q1 2021. It was the port’s best quarter ever, breaking a record set in the fourth quarter of 2020 by about 55,000 TEUs.

“Imports are on the rise as we continue to clear the line of ships waiting to enter our port and move containers off the docks,” said Mario Cordero, Port of Long Beach executive director. “Collaborating with our industry stakeholders has led to notable improvements across the supply chain.”

The neighboring Port of LA reported earlier this week that it also had its busiest March and best-ever first quarter

The San Pedro Bay ports have numerous times delayed the launch of a container dwell fee to charge ocean carriers for boxes that remained on the docks too long. The two ports said they have seen a 49% decline in aging cargo on the docks since the fee was threatened in late October. They issued a joint statement Friday that the fee implementation would be put off yet again, this time until April 22.

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

Container shipping at the crossroads: The big unwind or party on?

container shippingThe debate heats up on whether this is the beginning of the end of container shipping’s bull run.

container shipping

Is faltering consumer demand curbing imports, allowing port congestion to finally ease, releasing container-ship capacity and causing ocean spot rates to sink? Is this the beginning of “the big unwind”?

Or does waning West Coast port congestion stem from temporarily lower exports out of China due to COVID lockdowns, combined with a congestion shift toward East Coast ports? Is the economy still strong and the ocean freight market still fundamentally firm, with the port crunch to worsen in the second half, pushing spot rates higher?

“The problem is you can still tell plausible stories in each direction,” Flexport economist Phil Levy told American Shipper. “We keep looking for all the signals to light up one way and for something irrefutable to happen. But there continues to be strong signals on both sides.”

Trans-Pacific spot rates

Different freight indexes are telling different stories.

“At the moment [Asia-West Coast] demand is fairly low, almost unseasonably so,” said George Griffiths, managing editor of global container freight at S&P Global Commodity Insights. “We always see a lull post-Lunar New Year with rates coming off slightly. But this year they have fallen further than they normally do.”

S&P Global Platts currently assesses Asia-West Coast rates at $8,000 per forty-foot equivalent unit, not including premium surcharges. That’s down 16% from $9,500 per FEU in early March.

In contrast, Platts currently puts Asia-East Coast rates at an-all time peak of $12,000 per FEU, up 10% year to date.

container rates
Chart: American Shipper based on data from S&P Global Commodity Insights

The weekly Drewry assessment for Shanghai to Los Angeles came in at $8,824 per FEU on Thursday. That was down 20% from $10,986 in early March — roughly mirroring the Platts numbers. Yet Drewry put the Shanghai to New York rate at $11,303 per FEU, down 19% from a January high of $13,987 — the opposite of the rising trend reported by Platts.

Xeneta puts the Far East-West Coast spot rate at $8,752 per FEU, plus optional premiums of $1,967-$5,503. This is up 9% from $8,021 on Jan. 2, the opposite of the downward trend on this route shown by Drewry and Platts.

The Freightos Baltic Daily Index (FBX) — which shows higher rates than others because it includes premiums in its trans-Pacific assessments — was at $15,817 per FEU on Thursday for the Asia-West Coast route. That’s up 15% year to date. The Drewry assessment for this lane is down 21% year to date.

container rates
Blue line = Freightos rate in $ per FEU. Orange line = Drewry rate. Chart: FreightWaves SONAR (To learn more about FreightWaves SONAR, click here.)

In the past, various indexes have given very different dollar assessments (due to different methodologies) but they generally moved up and down in the same direction over time. Now, even the directions shown by the indexes are diverging.

Port congestion in flux

Spot rates are heavily affected by port congestion. There were just 41 container ships waiting for berths in Los Angeles and Long Beach on Thursday, down sharply from the all-time high of 109 on Jan. 9.

The queue was just 33 on Monday — only five ships higher than on the same day last year.

Chart: American Shipper based on data from Marine Exchange of Southern California

Southern California port congestion “eased faster than expected,” wrote Bank of America analyst Ken Hoexter on Thursday.

“I think lots of sailings have been pulled at the last minute, so queues have fallen somewhat,” said Griffiths.

Xeneta Chief Analyst Peter Sand told American Shipper, “The West Coast is getting some breathing space due to fewer boxes leaving Asia [due to COVID lockdowns] but also, more importantly, shippers shifting inbound volumes from the West Coast to the East Coast.

“Shippers are really shifting cargo to the East Coast more dramatically than they have before,” he said. “They are fleeing the West Coast in fear of massive disruptions from upcoming negotiations with the labor unions [on the port worker contract that expires July 1].”

MarineTraffic tracks the capacity of ships (measured in twenty-foot equivalent units) waiting to get into West Coast ports versus East Coast ports.

The MarineTraffic data reveals a major reversal: The East Coast now has more capacity waiting than the West Coast. As of Wednesday, ships waiting in the East Coast queue had 87,000 TEUs more capacity than those in the West Coast queue.

Chart: MarineTraffic

Data provider eeSea also tracks port congestion levels. It uses ship-positioning data to calculate a congestion ratio: ships waiting for berths at regional ports as a percentage of the total number of ships at berths as well as waiting.

The eeSea data reveals that Los Angeles/Long Beach congestion has fallen sharply year to date as East Coast congestion has risen. The congestion percentage off Shanghai and Ningbo in China was lower than U.S. levels until the middle of last month. Chinese congestion levels are now higher than Southern California’s, according to eeSea.

*East Coast ports: NY/NY, Norfolk, Charleston, Savannah. Chart: American Shipper based on data from eeSea

Conflicting signals

Deciphering all these market signals has become increasingly complex. Spot rates appear to be pulling back, but not by all accounts. Congestion looks like it’s falling, but it may be just shifting to other ports, and declines may reverse when Shanghai lockdowns end. U.S consumer demand plays a role as well, but how much and for how long remains unclear.

Lars Jensen, CEO of consultancy Vespucci Maritime, wrote in a commentary published by the Baltic Exchange that China’s COVID lockdowns will reduce demand for space on ships sailing out of Shanghai in the very near term, meaning “there will be more vessel space available for other ports in the region and the expectation should therefore be for downward pressure on freight rates.

“Once we see a reopening, the expectation should be for a surge of cargo coming out of Shanghai” which “will lead to a sharp upward pressure on freight rates.”

Jensen acknowledged a wildcard is “growing concern in the U.S. as to the impact inflation has on consumer spending. If consumer spending drops, this … would put a large dampener on export volumes out of China.”

This wildcard might already be in play. Bank of America just downgraded nine transport stocks “on demand concerns and pricing declines.” FreightWaves’ trucking data shows a sharp slowdown in domestic freight demand, including in non-port markets. Retailer Restoration Hardware recently confirmed a sudden drop in demand for its household goods.

“The trucking data is some of the most compelling I’ve seen arguing for a slowdown and there is [weakness] for things like home furnishings especially,” said Levy. These could be “early warning signs” of broader weakness.

Other indicators point to continued freight strength. “Prices are soaring, the labor market is incredibly tight, inventory-to-sales ratios are still below pre-pandemic levels, and many would argue — due to just-in-case over just-in-time [strategies] — that you’d want that ratio higher [than pre-pandemic].”

“If I had to come down on one side, I think it does start to look like a slowdown. But there is a lot of uncertainty. And what’s true in the freight market is true for the economy writ large,” Levy said.

“You’ve got a good chunk of the Fed saying, ‘Hey look, this is all about to slow down. We don’t really need to do very much and inflation is going to come down on its own.’ And you’ve got the whole other school of thought weighing in heavily and saying, ‘What are you doing? You’re way behind the curve. You’ve got to slam on the breaks and raise interest rates.”

What’s happening within the Fed is “a parallel debate” to the one underway in shipping, he said.

Click for more articles by Greg Miller 

Port of Long Beach Sees No Letting Up of Imports… Yet

By Laura Curtis (Bloomberg) — The head of the U.S.’s second-busiest container seaport said he has seen no letup in import volumes, though there may be some slowing in coming months…

By Laura Curtis (Bloomberg) — The head of the U.S.’s second-busiest container seaport said he has seen no letup in import volumes, though there may be some slowing in coming months...