North America Market Update

Volumes remain relatively unchanged since September. The U.S. East and Gulf Coasts continue to outpace the West Coast in terms of overall year-over-year import container volume growth in part due to shipper concerns over potential disruptions resulting from the still unresolved ILWU / PMA contract negotiations.

Congestion on the West Coast has eased significantly, and we are seeing the lowest year-to-date volume of 14+ day longstanding import cargo units on the terminals.

West Coast Highlights

There have been improvements on the West Coast ports with the exception of Oakland where the backlog of vessels stands at 16 ships. Vessel wait times are up to 25 days, in part due to two cranes being down for maintenance. The vessel line up, yard congestion, and rail status markers are in the red.

Los Angeles and Long Beach have both seen improvements. The number of vessels within 150 nautical miles of San Pedro Bay has remained below 10 vessels for several weeks and wait times have been reduced to under a day. Currently there are 44 vessels heading towards the Bay, with 22 allocated for each port. Rail availability continues to stabilize and improve.

Congestion and delays continue in the Pacific Northwest, particularly at Centerm in Vancouver where vessel waiting times range up to 28 days.

East Coast Highlights

With the shift of cargo volumes to the East and Gulf Coast several ports remain congested. Houston is experiencing congestion with vessel wait times up to 15 days at Bay Port with its three available berths. Barbours Cut is faring better with just 2-to-4-day vessel wait times for its six berths. In September, Port Houston handled its second highest month ever following its August 2022 record month. September year-over-year volumes were up 31%.

There are approximately 30 container ships at anchor in Savannah. Vessel waiting time ranges from 10-20 days. The Port of Savannah stated that it expects to clear the need for vessels to wait at anchor by the end of November. Anticipated improvements are due to higher productivity forecasted before the upcoming holidays and decreased import volume.

We continue to see improvements at Newark PNCT and Elizabeth APMT. Vessel wait times for both terminals are down to 0-4 days.

 

Growing Warehousing and Transportation Labor Demands

Evolving consumer buying patterns and a pandemic-driven warehousing boom have resulted in a corresponding growth in demand for a robust logistics workforce. With the U.S. 3.5% unemployment rate at 50-year lows and year-over-year average hourly earnings on the rise, the battle for attracting and retaining the best talent is particularly fierce. In fact, the Bureau of Labor Statistics ranks “Transportation and Warehousing” among the industries with the largest wage and salary employment growth. The sector employed nearly 6.6 million people as of 2021 having grown by 1.8 million in the last decade, with projections the sector will add another 466,000 jobs through 2031.

 

Key Notes on North American Supply Chains

  • BMWED rail union rejection of contract deal raises possibility of November strike:While the tentative deal struck in September between the National Carrier’s Conference Committee and 12 rail worker unions averted a general strike last month, membership of several unions have rejected the proposed terms, including the Brotherhood of Maintenance of Way Employees Division (BMWED), which seeks additional sick days and improved working conditions. There is no immediate threat of a rail service disruption as the union has given rail companies until November 19 to renegotiate. If one of the rail unions goes on strike, there is a likelihood that the other units would stay off the job as well, causing a general shutdown that could impact 30% of the country’s freight. To date, about half of the 12 rail worker unions have approved contracts, with membership voting expected to continue through mid-November.
  • China implements epidemic prevention measures in the Ningbo Beilun district:On October 14th China implemented measures to manage a local COVID-19 outbreak. The Ningbo port and terminals are in operation with slight impact on terminal productivity. There is a larger impact on landside operations with the suspension of activities at local depots, factories, warehouses and trucking services within Beilun district. The market expectation of this temporary lockdown is short-term. Activity is expected to resume in the last week of October. All other districts of Ningbo are operating as normal.
  • ILWU / PMA Negotiations Continue on West Coast:While the West Coast ports continue to operate business as usual, more than three months have lapsed since the labor contract expired on June 30th. The parties have issued joint releases affirming a mutual desire to avoid any work stoppages. Meanwhile, no strike deadline has been set by the unions as the two parties continue their negotiations in San Francisco. The ILWU and PMA did reach a tentative agreement in late July on healthcare benefits, but no further information has surfaced with the agreed upon news blackout that remains in place.
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