Cargo flies through ports, but bosses face ‘modest’ holidays ahead – Sourcing Journal

Cargo demand is declining, but that’s good for port productivity. That’s according to new data showing North American ports are seeing the biggest year-over-year upswing.

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

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

According to Turloch Mooney, director at S&P Global Market Intelligence, the decline in container demand has resulted in a drop in the average number of containers loaded and unloaded per ship call, reducing the operational burden on terminals.

Vessel wait times in North American ports are now 67.2 percent shorter, further increasing productivity.

Call size, which is the number of containers loaded and unloaded at a port call, declined year-on-year in all regions, with the largest decline seen in North American ports (26.5 percent). The drop in the number of calls comes as the region’s ports saw the strongest recovery overall, even amid prolonged delays, as people feared a strike at West Coast ports.

“They may pick up again if demand increases seasonally or otherwise,” Mooney told Sourcing Journal. “The most important thing is to be able and have the flexibility and capacity to deal with seasonal peaks and larger demand volumes when they occur.”

Smaller call sizes have led to more port calls across the board since the second quarter of 2022, when out-of-port congestion was still severe enough to pull up to 20 percent of capacity out of the system, Mooney said.

“When they’re moored offshore for weeks, they have less time to talk on the water on the phone,” Mooney said.

In addition to improvements in ship turnaround times, the average dwell time of import containers in North American ports — the time from unloading a container from a ship to its release at the terminal gate — remained stable at about three days in 2023.

“The system and port call processes are more fluid now,” Mooney said. “Ports don’t experience excessive delays and high demand, so yards aren’t as congested as they were in 2021 or early 2022 when there were problems with evacuation on landside and then yards filled up really quickly with these large call sizes. Today’s situation is much better. Further up the supply chain, there is more focus on measures to improve capacity and equipment availability, so boxes are obviously picked up faster.”

Consistent with data presented by S&P Global, the decline in cargo shipments this year has continued to be felt at US West Coast ports.

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

“Global trade has eased as inventories from retailers and manufacturers remain high,” Gene Seroka, executive director of the Port of Los Angeles, said in a statement. “American consumers continue to spend and will likely find more discounted items this year as we approach fall fashion and the holiday season at the end of the year.”

Seven months into 2023, the port has handled more than 4.8 million TEU, down about 24 percent from the same period last year.

Likewise, trade at the Port of Long Beach fell in July, as dockers 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 towards travel, entertainment and other experiences.

In the first seven months of 2023, the port moved more than 4.3 million TEU, 25.6 percent less than in the same period last year.

“I am confident that our numbers will improve as we work with industry partners to rebuild our market share,” Port of Long Beach CEO Mario Cordero said in a statement. “However, looking ahead, we expect a moderate ‘peak season’ for shipping as consumers spend slightly less on back-to-school items and gifts this year during the holiday season.”

Bucking the trend of its larger Californian counterparts, the Port of Oakland posted a loading container volume, its highest level since October 2022. The number of full TEUs rose 16.8 percent in July 2023, with the hub handling 136,181 TEUs.

Container traffic in July 2022 was “unusually low,” the port said in a statement, largely due to trucker protests that disrupted operations for a week.

In the first seven months of the year, handling fell by 14.2 percent to around 1.2 million TEU.