Southeast ports big winners in 2019 due to shift in container imports

Ships calling on the Port of Savannah

This article brought to you courtesy of NEXT Trucking

This year marked big shifts in seaborne trade to and from the U.S. 2020 promises to make that shift even more pronounced as ports plan to unveil new infrastructure and other projects.

The top 10 U.S. ports saw import container volumes grow 1.1% through October, according to the latest public port throughput data, reaching 17.55 million twenty-foot equivalent units. The slight growth nationwide, though, belies the diverging fortunes of the West and East Coast ports.

The four largest West Coast ports saw import volumes drop 3%, with Long Beach seeing the steepest fall at 7.7% through October, followed by Seattle-Tacoma’s 2.4% fall in import volumes. Los Angeles, the largest U.S. container port, saw essentially flat import volumes this year.

Monthly container imports to the Los Angeles and Long Beach ports are down 8% and 12% respectively from a year earlier SONAR: IMPTEU.USLAX, IMPTEU.USLGB

That contrasts with the six largest East Coast ports, which saw import volumes rise 6%. Savannah led with nearly 8% growth in import TEUs, followed by Charleston with 7% growth in import containers through October. New York-New Jersey ports saw imports grow 4% through October.

The divergence stems from the slowdown in imports from China due to the ongoing trade war with the U.S., and the result of increased investment by East Coast ports to handle larger ships.

The value of Chinese imports coming into Los Angeles, Seattle and San Francisco fell 16% through October 2019 to $140.76 billion. Less exposed to the China trade due to longer sailing distances, East Coast ports nonetheless also saw a 10% decline to $81.6 billion over the same period of time.

The downturn in the trans-Pacific trade prompted ocean carriers to cut back a significant number of sailings. According to U.K.-based PR News Service, at least 20 scheduled weekly sailings from Asia to the North American west coast were cancelled during the fourth quarter, amounting to just under 183,000 TEUs in capacity taken out of the market.

The Phase One deal between the U.S. and China, which halted an additional 15% tariff scheduled for Dec. 15 on approximately $160 billion in imports, is considered a preliminary truce in the trade war. But with tariffs still in place on over $250 billion in goods coming from China, shippers naturally remain wary about sourcing more from China.

In a radio interview, Port of Los Angeles Executive Director Gene Seroka said the new trade agreement was a good first step, but there is “more work to do, in our opinion.” But the deal will do little to quickly bring volumes back to West Coast ports.

“On the import side, I don’t see anything happening overnight,” Seroka said.

The result is that more weekly ocean shipping services will be canceled at the start of 2020. During the first quarter, at least 17 weekly sailings on the trans-Pacific lane have been canceled, according to PR News Service, amounting to 139,000 TEUs in capacity out.

The offset to declining Chinese imports has been the growth of new manufacturing sources in Southeast Asia and the Indian subcontinent. Vietnam’s exports to the U.S. saw one of the biggest gains, with imports from that country reaching $55.4 billion in October, a 34% gain. Bangladesh’s exports to the U.S. are up close to 10% to $5.7 billion, while exports from Cambodia are up 40% to $4.56 billion.

“The work that has been taking place to migrate sourcing to Southeast Asia is real, and we’ve had an uptick of double-digit growth in many of our Southeast Asian countries for finished goods,” Seroka said.

More of those goods, though, are heading to ports along the U.S. East Coast. Transit times from Southeast Asia to the U.S. East Coast are longer than to the West Coast by about six days. But with intermodal rail taking at least four days to reach destinations east of the Mississippi, more shippers are seeing the value in an East Coast landing.

Both Charleston and Savannah saw stronger inbound container volumes this year. SONAR: IMPTEU.USCHS, IMPTEU.USSAV

New York and New Jersey, which overtook Long Beach this year as the second busiest U.S. container port, saw a 21% gain in trade with Vietnam, reaching $4.56 billion through October 2019. The port of Savannah’s trade with Vietnam reached $2.3 billion over the same time, a 56% increase over 2018.

To handle the rising volumes, East Coast ports are investing in expansion projects. Savannah is halfway through a nearly $1 billion dredging project that will bring its harbor to 47-feet depth, which will allow it to handle up to six 14,000-TEU ships simultaneously. It also plans to add six ship-to-shore cranes in 2020 to the 30 already in service. The first phase of its expanded intermodal rail terminal will also open in March 2020.

Charleston’s port secured $138 million in federal funding as part of the $600 million dredging of its harbor to 52 feet, allowing the port to handle even larger 19,000-TEU ships. The dredging is expected to be completed in 2021. It also broke ground on the 280-acre Hugh K. Leatherman terminal, which will boost Charleston’s capacity 50% by the time the dredging is complete.

Charleston’s Wando Welch Terminal will add three 155-foot ship-to-shore cranes, swapping out smaller cranes, and adding another four later this year, allowing Wando Welch to service three, 14,000-TEU ships simultaneously by 2020.

Next year, the Port of Virginia will begin dredging to 55 feet and widening its ship channel to 1,400 feet to allow for two-way traffic for ultra-large container ships.

With limited ability to expand, West Coast ports aim to increase the efficiency with which they handle boxes. The largest container terminal on the U.S. West Coast, APM Terminals’ Pier 400 site in Los Angeles, is rolling out 130 automated straddle carriers, which will be used to move containers to trucks in place of manually driven yard trucks. Pier 400’s neighbor, Fenix Marine’s Pier 300 site, is turning to software and artificial intelligence to optimize container positioning and truck appointments for the lowest turn times.

TraPac’s Los Angeles terminal is partnering with drayage tech platform NEXT Trucking to optimize container movements.

Export containers have also been particularly hard hit during the trade war. Total container exports out of the U.S. through October are flat with last year at 9.68 million TEUs. Of that, the West Coast saw outbound container volumes drop 4% while the East and Gulf Coast ports saw a 2% gain.

Chinese tariffs on U.S. farm products such as soybeans and pork, and restrictions on scrap metal and paper, have crimped outbound volumes at Los Angeles, Seroka said. The new trade deal with China may help, as “we need to get back in business on the agriculture and recyclables side of what we do in the Port of Los Angeles.”

The one bright spot on the export side has been a resurgent U.S. petrochemical industry, which is tapping global markets for plastic resins. Thanks to its proximity to major plants, Houston’s export volumes through October reached over 1 million TEUs, a 16% increase from the year before. Only Savannah and New York-New Jersey saw higher overall exports over the same time.