Cargo Is Flying Through Ports But Bosses See ‘Modest’ Holiday Ahead

Date: Friday, August 25th, 2023
Source: Sourcing Journal

Cargo demand is down but that’s good for port productivity, according to new data showing North American ports seeing the biggest rebound from a year ago.

According to the inaugural Port Performance Program analysis from S&P Global Market Intelligence, North American ports saw a 28.2 percent year-over-year improvement in port moves per hour (PMPH) in the second quarter.

PMPH measures the quantity of containers moved per hour a vessel is in port. The higher the number, the more efficient the port.

The drop in container demand has led to a fall in the average quantity of containers loaded and discharged per vessel call, reducing the operational strain on terminals, according to Turloch Mooney, director at S&P Global Market Intelligence.

Vessel waiting times are now 67.2 percent lower at North American ports, further improving productivity.

Call size, which is the number of containers loaded and discharged on a port call, fell year-over-year in all regions, with the biggest decline coming at North American ports (26.5 percent). The drop in call size correlates with the region’s ports seeing the steepest recovery overall even amid persistent delays when people were worried about a West Coast port strike.

“They will potentially increase again as demand increases, either seasonally or otherwise,” Mooney told Sourcing Journal. “The main thing is being in a position and having the flexibility and capacity to be able to deal with seasonal peaks and bigger call sizes when they do emerge.”

Smaller call sizes have led to more port calls across the board since the 2022 second quarter, which was still dealing with so much congestion outside the ports that took as much as 20 percent of capacity out of the system, Mooney said.

“When they’re tied up offshore for weeks and weeks, they have less time to be on the water making calls,” Mooney said.

In addition to improvements in vessel turnaround times, median import container dwell times at North American ports—the time from when a container is offloaded from a vessel to when it’s released at the terminal gate—have been stable throughout 2023 at roughly three days.

“There’s more fluidity in the system and the port call processes now,” Mooney said. “The ports aren’t experiencing excessive delays and high levels of demand, so the yards aren’t congested the way that they were back in 2021 or early 2022, where you had problems evacuating on the land side and then the yards filled up really quickly with these big call sizes. Today’s situation is much better. There’s more focus on measures to improve capacity and equipment availability, you know, further up the supply chain, so the boxes are evidently getting picked up more quickly.”

Aligning with the data illustrated by S&P Global, the decline in cargo shipments this year continues to be felt at U.S. West Coast ports.

The Port of Los Angeles moved 684,291 20-foot equivalent units (TEUs) in July, down roughly 26.9 percent from last year as cargo shipments declined compared to last year’s record month.

“Global trade has eased as warehouse inventories of retailers and manufacturers remain elevated,” said Port of Los Angeles executive director Gene Seroka in a statement. “American consumers are continuing to spend and are likely to find more discounted items this year as we move into fall fashion and year-end holiday season.”

Seven months into 2023, the port has processed more than 4.8 million TEUs, about 24 percent less than the same period last year.

Similarly, trade dipped at the Port of Long Beach in July, when dockworkers and terminal operators moved 578,249 TEUs, down 26.4 percent from July 2022, the port’s busiest July on record.

The port attributes the decline to adjusted trade routes, full warehouses and a shift in consumer spending to travel, entertainment and other experiences.

During the first seven months of 2023, the port has moved more than 4.3 million TEUs, down 25.6 percent from the same period last year.

“I am confident we will see our numbers improve as we work with industry partners to rebuild our market share,” said Port of Long Beach CEO Mario Cordero in a statement. “Looking ahead in the near term however, 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.”

The Port of Oakland bucked the trend of its larger California contemporaries with loaded container volume climbing to its highest level since October 2022. Full TEUs grew 16.8 percent in July 2023 with the hub handling 136,181 TEUs.

July 2022 container volumes were “abnormally low,” the port said in a statement, largely stemming from the trucker protests that affected operations for a week.

For the first seven months of the year, throughput fell 14.2 percent to about 1.2 million TEUs.


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