The good news for container lines: U.S. imports are still higher than they were before the pandemic. The bad news: This year’s string of month-on-month gains is over, says an article published on freight waves website.
Decline In Month-On-Month Imports
U.S. imports faced a setback in November, experiencing a 9% decline in twenty-foot equivalent units (TEUs) compared to October. The seasonal impact, coupled with challenges at the Panama Canal, contributed to the drop, negatively affecting freight rates.
China’s Role And Month-On-Month Decline
China has played a pivotal role in driving import volumes, accounting for 37.3% of total volumes. However, U.S. imports from China saw an 11.7% decrease in November compared to October. This decline constituted half of the overall month-on-month drop in imports.
Import Volumes Surpass Pre-COVID Levels
Despite the sequential decline, import volumes are still surpassing pre-COVID levels. Data for January-November reveals a 4% increase compared to the same period in 2019. November imports were up 10.4% from November 2019, indicating a positive trend.
West Coast Ports’ Market Share Reversal
West Coast ports have experienced a favorable market share reversal. After losing ground due to labor concerns earlier in the year, a new labor contract in June and challenges on the East and Gulf Coast, particularly at the Panama Canal, have helped West Coast ports regain market share.
Impact Of Panama Canal Drought
The ongoing drought at the Panama Canal is impacting U.S. container import volumes at East and Gulf Coast ports. The Panama Canal Authority’s plans to further reduce daily transit slots could exacerbate the situation, contributing to declines in port volumes.
Pressure On Spot Rates
The import pullback, combined with overcapacity, poses challenges for ocean carriers in raising freight rates. The decline in spot rates is evident, with China-West Coast rates down 21% from the peak in August. The China-East Coast spot rates also experienced an 18% decrease from the high in August.
Foreseen Challenges
The impact of the Panama Canal crisis and ongoing challenges may continue to influence U.S. imports, contributing to fluctuations in spot rates and necessitating careful monitoring of the evolving situation.
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Source: Freight waves
