A rare convergence of factors including suspension of Asia-U.S. East Coast services through the Red Sea is putting a spotlight on U.S. West Coast fluidity risk. The market was already seeing the return of diverted volume from the East Coast following resolution of West Coast labor unrest; possible East Coast labor disruption in 2024; Panama Canal navigation restrictions; and the potential that trans-Pacific import volume growth overall will rebound in the New Year given the U.S. economy being “on a sustainable growth path as consumer demand remains buoyant,” the National Retail Federation said in December. On top of that the attacks on shipping in the Red Sea and suspension of Alliance services to the North American East Coast will likely result in further diversions to the West Coast.
Volumes were already growing during the fall, recovering on a year over year basis beginning back in April (see chart). The Port of Los Angeles reported a 25% increase in loaded imports in November and 19% overall year over year growth, the fourth straight month of year over year overall volume increases, with each of those months growing at a faster pace. That reflects the impact of diversions as well as what the NRF said was a “later than expected” 2023 holiday peak import season. Ocean carriers tell the Journal of Commerce that some BCOs are requesting West Coast routings as part of 2024-2025 contracts to avoid potential East Coast labor trouble. The International Longshoremen’s Association has told its rank and file to prepare for a strike given that they will refuse to work beyond the expiration of the current contract on Sept. 30, 2024, if no new contract has been agreed to.
There are few issues yet. As the Marine Exchange of Southern California reported in mid-December, “Vessels and cargo arriving, departing, and shifting around the ports of LA and LB continue to move normally with no labor delays.” As import volumes built throughout the fall, rail dwell times inched up (see chart) while a fresh labor skirmish broke out at LA-Long Beach in mid-December over maintenance and repair of trucker-owned or leased chassis.
Taking the pulse of potential risks around West Coast port fluidity in 2024 will be a key objective of the TPM24 program.
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