As East Coast ports gain more trade with China, more bottlenecks for supply chains

Port productivity remains a major barrier to US supply chains because billions of dollars of products are berthed or landless, and the shift to using East Coast ports through West Coast ports creates new pressure.

Over the past three months, vessel capacity between the Far East and the East Coast of the United States has increased 18.9 percent year-on-year, according to air and ocean freight research firm Xeneta. While the West Coast continues to lead in terms of the Far East container market share at 59.8%, the East Coast is continuing to lose more capacity as logistics managers move away from the West Coast due to fears of a trade strike. labor work.

Over the past three months, container capacity on the West Coast also fell 1.7 percent. This has an impact on the trucking and rail companies serving the West Coast because of less container volume moving. BNSF Railway Company, owned by Berkshire Hathawayand Union Pacific, especially serving West Coast ports. On the other hand, it was a boom in rail and truck service on the East Coast with an increase in output. Norfolk Southern and CSX are railroad companies serving East Coast ports. Unlike railways, trucking companies are capable of serving both coasts.

Peter Sand, Director of Shipping at Xeneta, said: “As more ships and cargo head east, volumes are up 11.9% so far this year, with a 7.3% increase over the same period. last year,” said Peter Sand, Xeneta’s shipping director. “This puts pressure on capacity and has a cost in reliability. So in a way, the East Coast becomes a victim of its own success and the West has breathing space to breathe. somewhat recovered.”

The lack of breathing room and delays in container deliveries can be tracked through a vessel’s total transit time – the time it takes a vessel to travel from the port of origin to the port of destination.

Time is money, and a vessel or container at rest gets both out of the supply chain for faster use. It is also one of the drivers of Container prices increase.

According to Project44, the average transit time from China to the West Coast before the pandemic was less than 20 days to 25 days on the West Coast; and 38 days on the East Coast.

“For the West Coast, travel time has now been reduced to 24 days,” said Josh Brazil, Project44’s VP of Supply Chain Insights. “So we’re in a good spot on the West Coast right now, but again, moving to the East Coast, that transit time has increased. The increased transit time tells us that the port has more capacity. “Unfortunately, with more ships calling on the East Coast in the coming months, we expect the congestion to continue.”

CNBC’s supply chain heatmap has tracked increased trade flows from the West Coast to the East Coast and the congestion it is creating.

Wait times in Savannah have increased for 10 consecutive weeks, according to Alex Charvalias, supply chain visibility lead at MarineTraffic. That’s up from a single wait day in May 2022 to more than 13 days now. “There was no sign of comfort in the following weeks,“ Charvalias said.

Sea-Intelligence reports that congestion on the East Coast has now gotten so bad that fewer than a fifth of container ships arrive on time (18.7%).

“Ports in Europe and in China are larger and automated so they can better cope with disruptions,” said Brazil. “Those ports have driverless trucks that have chassis to pick up those containers, and it really speeds up the process of getting ships in and out and loading,” he said.

In China, a vessel can be processed in less than a day, according to Brazil. In Europe, it can take two days. But in the United States, for the Port of Los Angeles and other ports, it can take four to six days.

Automation is one of the problems in ongoing contract negotiations between West Coast ports and the labor union for dock workers.

“So there’s really a big difference there in terms of what automation can do. Automation is a controversial topic because there are jobs attached to it. This is going to be a topic of discussion. controversial for a long time to come,” Brazil said.

Supply Chain CNBC Heat USAonep-data provider is the artificial intelligence and predictive analytics company Everstream Analytics; global shipping booking platform Freightos, creator of the Baltic Freightos Dry Index; logistics supplier OL USA; FreightWaves supply chain intelligence platform; supply chain platform Blume Global; third-party logistics provider Orient Star Group; marine analysis company MarineTraffic; marine vision data company Project44; shipping data company MDS Transmodal UK; Air and ocean freight benchmarking and market analysis platform Xeneta; leading provider of Sea-Intelligence ApS research and analysis; Crane Worldwide Logistics; and by air, DHL Global Forwarding; freight logistics service provider Seko Logistics; and Planet, global, everyday provider of geospatial and satellite imagery solutions.