May import numbers are in and yet again, the trend is closely aligned with pre-COVID levels in 2018-2019. But there are two big differences between at times.
Port labor disruptions at the moment are impacting Asian cargo flows to the West Coast and low water levels within the Panama Canal are affecting Asian cargo flows to the East and Gulf coasts. If these issues persist and there’s a “normal” peak season volume upswing within the months ahead, importers could face higher-than-normal complications.
May imports rise versus April
U.S. ports handled 2,097,313 twenty-foot equivalent units of imports in May, in keeping with Descartes. That’s down 20% yr on yr, but 2022 numbers were heavily skewed by a one-off event — the pandemic-induced shipping boom.
![chart of US imports](https://www.freightwaves.com/wp-content/uploads/2023/06/08/image-2-1200x584.png)
May’s imports were up 3.8% from April and 0.5% from May 2019, pre-pandemic.
“As with the primary 4 months of 2023, the expansion in import volume in May continued to trace 2019 volumes,” said Chris Jones, executive vp of industry and services at Descartes Systems Group.
Imports from China were the most important gainer in May, up 37,991 TEUs versus April, with imports from Vietnam the second-largest driver, up 20,362 TEUs.
Descartes uses customs data to generate import figures. One other data source, Global Port Tracker, published by the National Retail Federation and Hackett Associates, covers imports to 12 leading U.S. ports using official numbers released by the ports.
Final numbers usually are not in yet, but Global Port Tracker estimates May volumes will total 1,844,625 TEUs for the ports it covers. That’s up 3.6% month on month and tracking very near pre-COVID levels: down 0.3% versus May 2019 and up 1.1% versus May 2018.
The NRF and Port Tracker predict this yr’s peak season will follow a typical pattern and be up barely versus the pre-COVID years. Its latest projection is for June-October volumes to be 4% higher than the identical period in 2019 and three% higher versus 2018.
![chart of US imports](https://www.freightwaves.com/wp-content/uploads/2023/06/08/image-1200x481.png)
More container ships headed to US
“We’ve got 52 ships on the best way now from Asia to Los Angeles and Long Beach with a complete capability of 470,000 TEUs,” Port of Los Angeles Executive Director Gene Seroka said during a board meeting Wednesday.
“That is the best number I can recall since last August, when cargo began to be purposefully moved to the East and Gulf Coast ports [due to concerns over labor disruptions]. So, we’re beginning to see a bit of little bit of an uptick, with more cargo coming.
“Our estimate is that our traditional peak season, which caters to Christmas and Hanukkah and other holiday celebrations, will probably be in September and October this yr — and won’t be super-long or super-elevated,” said Seroka.
He expects elevated inventory levels to maintain peak season subdued, but foresees “a more traditional cadence” akin to pre-pandemic import timing.
Seroka’s comments on the rising variety of inbound vessels echoed a report by Alphaliner on Tuesday. “Outbound trans-Pacific cargo movements spiked to their highest level in six months in May, giving some optimism to carriers,” it said.
Alphaliner cited statistics from the Japan Maritime Centre showing that monthly outbound trans-Pacific volumes exceeded 1.5 million TEUs for the primary time since October.
Labor disruptions impacting ship schedules
Rising seasonal volumes could come head-to-head with labor disruptions on the West Coast and water-level limits on the Panama Canal.
Dockworker slowdowns are beginning to affect the schedules of ships calling at West Coast ports. Queues remain very small in comparison with COVID-era levels, but they’re growing. Ship-location data from MarineTraffic showed eight container ships waiting offshore of U.S. West Coast ports as of mid-day Thursday.
“I hope the [labor contract] negotiations end soon, since it’s in no one’s best interest to have unrest on that front as we move into peak season,” said Rolf Habben Jansen, CEO of ocean carrier Hapag-Lloyd, during a presentation Monday.
In response to Jonathan Gold, vp for supply chain on the NRF, “Cargo volume is lower than last yr but retailers are entering the busiest shipping season of the yr, bringing in holiday merchandise. The very last thing retailers and other shippers need is ongoing disruption on the ports.
“If labor and management can’t reach agreement and operate easily and efficiently, retailers could have no alternative but to proceed to take their cargo to East Coast and Gulf Coast gateways,” said Gold.
Canal water restrictions to extend
The issue with taking cargo the East Coast and Gulf Coast gateways is that Panama is experiencing its worst drought since 1950, restricting ships drafts within the canal. The Panama Canal Authority (ACP) warned Monday that water levels could proceed to fall and “unfortunately, current estimates indicate that the economic impact is unavoidable.”
The utmost draft for the larger Neopanamax locks has been reduced to 44.5 feet, with expectations for a discount to 43 feet by August. “A limited variety of ships have needed to lower their drafts to comply,” said the ACP.
In response to Habben Jansen, the present situation within the Panama Canal is worse than in previous droughts. “For the time being, we usually are not diverting ships,” he said. “However the effect is you can simply load less boxes on the identical ships, which is after all not a very good thing.”
Lars Jensen, CEO of consultancy Vespucci Maritime, said in an internet post, “Shippers using the Asia-U.S. East Coast service through the Panama Canal might want to think about contingency plans for services routed through the Suez and/or plan for further surcharges.”
Trans-Pacific spot rates rising
Trans-Pacific spot rates could rise greater than they otherwise would if peak season volumes coincide with labor and canal disruptions.
Spot rates are still at loss-making levels, but they’ve recently increased. A June 1 general rate increase is one driver, but labor and canal disruptions can also be playing a task.
The Drewry World Container Index (WCI) spot assessment for Shanghai to Los Angeles rose 6% within the week ending Thursday versus the prior week, to $1,896 per forty-foot equivalent units, the best level because the week ending March 23. The WCI Shanghai-Recent York index rose 5% week on week to $2,975 per FEU, its highest level because the week ending Feb. 16. Drewry said it expects rates to proceed to rise over the subsequent few weeks.
The Freightos Baltic Every day Index (FBX) China-West Coast spot assessment was $1,557 per FEU on Thursday, up 20% over the past week. The FBX China-East Coast index was at $2,652 per FEU, up 15% week on week.
![chart of container shipping spot rates](https://www.freightwaves.com/wp-content/uploads/2023/06/08/image-1-1200x340.png)
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