Descartes’ U.S. Ports Report explains why a down year wasn’t really a down year for U.S. ports.
U.S. ports experienced a surprising year in 2023, according to the 2024 U.S. Ports Report from Descartes. “With a few exceptions, 2023 was not the year that most expected for the leading U.S. ports of entry and that is not necessarily bad news,” the report states.
Despite decreased TEUs for many ports when compared to 2022, and overall volume down 11% from the record levels attributed to a post-pandemic rebound in 2022, the industry defied predictions of a recession, with total containerized import volumes through U.S. ports growing 4.4% compared to pre-pandemic volumes in 2019.
Expect The Unexpected
Wood says 2019 was the last “normal” year — when there was a more stable and predictable international trading environment – and that is why the report highlights the comparison to 2019. But the pandemic was a generational shock to the industry, and we do not have a precedent for comparison. With this in mind, we cannot simply expect a return to pre-pandemic volumes.
“We believe there isn’t necessarily a return to baseline anywhere in the near future,” Wood explains. “COVID 19 was the catalyst of this volatile era that we seem to have entered into, but it was just the first of many disruptions.” Wood cites a range of diverse supply chain challenges that have contributed to post-pandemic instability, including the Russia-Ukraine conflict, Houthis attacking ships in the Suez Canal, historically low water levels in the Panama Canal, and ongoing geopolitical tensions between the United States and China.
“So, one of the big themes that we talk about is: expect the unexpected,” Wood says.
Better Than Anticipated
In addition to import volumes surpassing 2019, late 2023 gains were also promising - October (4.3%), November (7.5%) and December (9.4%). Early 2024 gains were even better - January (9.4%), February (22.3%), and March (14.4%) - potentially signaling real growth.
It is important to note that this data counters the industry’s low expectations for 2023. Wood says there were many economic predictions for what was going to happen last year — a likely recession, as well as depressed consumer demand and import volumes. “But that did not prove to be the case, and that is borne out by the data in our report,” he asserts. “If we look across the last three plus years, we are seeing increasing volume and value of imports. If I was an importer, I would be thinking we have a stronger and more vibrant economy than we originally thought.”
East Coast Vs. West Coast
One port that stands out in the report is Port of Boston. Out of the top 30 U.S. ports, Boston experienced the largest percentage increase in TEUs over the previous year — an impressive 36.2%.
“Boston made a very significant investment in improving the infrastructure, to make the port more accessible, and to be able to handle greater volumes, so my hypothesis is that the data shows the investment is beginning to pay off,” Wood theorizes.
However, he adds that it is possible an expected labor disruption on the West Coast — that never materialized — also boosted East Coast ports by rerouting traditionally West Coast shipments. The data supports this narrative, with Port Tampa Bay achieving the second largest gain at 28.5% over 2022, while the two ports with greatest losses by percentage were on the West Coast — Seattle (-31.9%) and Portland (-23.5%).
Solar Energized
The report also highlights specific commodities. For example, Wood says the data points to steady increases in imports of solar energy components, including panels, electronics and software.
“We are seeing consistent over-performance in this type of commodity across all ports. I think that’s a very interesting signal,” he explains. “I think the context is that as the prices come down on solar components, the green energy transition is starting to ramp up. You could make the argument that some of the subsidies and actions taken by the current administration to accelerate investment in green energy are paying off. The commodity data tells us that this trend definitely has legs despite questions over a number of years about whether the U.S. is really serious about solar energy.”
The data also reveals a shift in centers of production of solar panels, as sourcing becomes more diversified. In 2011, China had 50% of this market. By 2023, import duties reduced China’s share to less than 1%, while Vietnam, Malaysia, Thailand, Cambodia and India have all made significant gains.
Resiliency and Responsiveness
The data from the report is delivered by Descartes Datamyne, a web-based platform that provides near real-time global import and export trade data to help companies navigate today’s unpredictable supply chain.
“The key takeaway from the report: it is incumbent on organizations to use data like this to build resiliency and responsiveness into their global supply chains,” Wood advises, adding that companies need to diversify, rather than remain dependent on one particular supplier, country, region or port. The report suggests the data can uncover alternative routes and counter strategies that mitigate risk and strengthen competitive advantage.
Wood recommends scenario planning with a digital twin — a virtual simulation of the supply chain — so you can stress test your different options and be prepared for changes and disruptions. “Understand the potential volatility so your business can have contingency plans. It’s really about being proactive and creative, thinking about where you may be exposed to risk that you had not contemplated previously, like what just happened with the Francis Scott Key Bridge in Baltimore.”
Wood concludes, “I think we have to recognize that we are now in a persistently volatile trading environment. The key is to get away from trying to predict the future and instead be ready for anything that’s going to happen.”
For further information on Descartes’ port report: https://www.descartes.com/lp/2024-top-30-us-port-report?utm_source=Datamyne+Website+U.S.+Port+Report+Campaign&utm_medium=Datamyne+Website&utm_campaign=DTM_eMarketing_US_Port_Report_Campaign_FY25Q2&utm_id=CMP-03712-R5X6
