US imports begin to rise, West Coast labor negotiations become a priority

According to the latest monthly global port tracking report released by the National Retail Federation (NRF) and Hackett Associates, U.S. imports fell to their lowest level since the pandemic in February. However, imports are now climbing. As imports at major U.S. container ports continue to increase, labor negotiations at West Coast ports have become a top priority.

It is understood that the contract between the International Longshore and Warehouse Union (ILWU, West Coast Longshore Union) and the Pacific Maritime Association (PMA) expired on July 1 of this year. Although terminal operations have not been interrupted, many shippers have transferred their cargo to other ports to avoid any potential disruptions.

“The priority right now is to resolve labor negotiations at West Coast ports to avoid any self-inflicted supply chain challenges on top of what we’ve faced over the past three years,” said Jonathan Gold, NRF’s vice president for supply chain and customs policy.

NRF sent a letter to President Biden last month signed by 238 national, state and local trade associations encouraging the administration to further engage in labor negotiations on the West Coast. In addition, NRF President and CEO Matt Shay met with Port of Los Angeles Executive Director Gene Seroka at NRF headquarters in Washington to receive an update on the status of negotiations.

U.S. import cargo volumes will climb steadily this summer but will remain below pandemic-era record levels, according to a report from NRF and Hackett Associates.

"Last year's spring and summer were the busiest times ever because people were spending and retailers were stocking up to meet demand," Gold said. "But that won't be the case this year."

“Import container volumes on the West Coast continue to decline with demand compared to last year as carriers increasingly reduce service to Los Angeles area ports and call vessels at other ports to help absorb excess capacity,” said Ben Hackett, founder of Hackett Associates. “At the same time, freight rates have also been impacted by the decline in demand. However, the emergence of new ships means that carriers have seen an improvement in demand.”

The report showed that U.S. ports handled a total of 1.55 million TEUs in February, down 14.4% from January and 26.8% from the same period last year, falling to the lowest level since May 2020.

Ports have not yet reported March numbers, but Hackett Associates forecasts that U.S. ports will handle 1.68 million TEUs, down 28.2% year-over-year. April was 1.86 million TEUs, down 18% year-over-year; May was 1.91 million TEUs, down 20.1% year-over-year; and June was 1.99 million TEUs, down 11.8% year-over-year. The first half of 2023 is expected to be 10.8 million TEUs, down 20.2% year-over-year; and the full year of 2022 is expected to be 25.5 million TEUs, down 1.2% year-over-year.

It is understood that the unusually high handling volume last year led to a sharp year-on-year decline. Starting in 2021, the United States had a total throughput of more than 2 million TEUs for 20 consecutive months, which ended in November last year. In contrast, during the epidemic period, the average monthly import volume was 1.8 million TEUs.

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