Analysts: US ports and intermodal carriers are braced for a surge in cargo volumes
Analysts found that U.S. container terminals and inland intermodal chains handled the surge in traffic without disruption, leading to confidence that further record volumes would not clog the system.
At a conference hosted by the Journal of Commerce and S&P Global, analysts focused on multimodal transport systems, particularly logistics through Southern California's container gateway.
Larry Gross, president of Gross Transportation Consulting, said the system is still handling increased container volumes even later in the year. He noted that last week was the busiest week of 2024 so far in North America, 10 weeks behind the traditional peak.
"Freight volumes in 2024 remain very strong," he said. He believes that freight volumes have continued to rise because of shipping activity offsetting upcoming import tariffs and the possibility of a second strike on the East Coast in January.
Daniel Hackett, a partner at Hackett Associates and co-author of the Monthly Port Tracker, noted that in the first 10 months of this year, U.S. West Coast ports handled 20.7 percent more imported cargo than in the same period in 2023, Imports at East Coast and Gulf Coast container ports rose 9.7% and 5.9%, respectively. Overall, port tracking shows that U.S. container imports are up 14.8 percent this year.
Gross pointed out that from ports to inland areas, the intermodal system handled elevated traffic without problem. "Overall, the company's performance is resilient," he said. Downstream capacity has been ample, from drainage to warehousing and chassis availability, he added.
He pointed to a slight weakness on the rail side, describing the speed of intermodal trains as "slightly below normal, but not catastrophic," adding that this had been offset by other indicators. He said the number of intermodal trains parked at the terminal was below normal and the number of fully loaded intermodal vehicles that did not move within 48 hours was below the five-year average. He concluded that the network was generally unstable.
The imbalance in imports and exports is a challenge for rail carriers because they have to ship large numbers of empty cars to the West Coast. Gross noted that the resulting container gap has soared to an average of 14,921 containers per month this year, up from 8,189 in 2023. In October this year, that number reached 22,014, equivalent to more than three trains a day.
Looking ahead, says Mark Sisson, senior port planner and analyst at AECOM, there is room for US container ports to grow without the need for new facilities. He reported that in terms of teu per 1,000 feet of dock, the Port of Los Angeles handled 260,000 teu, while the Port of Vancouver handled 391,000 teu. The number of TEUs treated per acre in Los Angeles is 4,800 TEUs and Vancouver is 7,800 TEUs.
He added that transferring containers to off-site locations by truck or rail can reduce pressure on terminals. He noted that BNSF is developing a 4,500-acre rail yard, intermodal facility and warehouse complex in Barstow that will be connected to the Los Angeles/Long Beach port complex.
Automation - a major bone of contention in contract negotiations between employers and labor at East Coast ports - could lead to additional capabilities, but so far the United States has shown less interest in that path than expected, Sisson said.
"In theory, all terminals can be automated, but very few do, especially outside of Southern California," he added.
In terms of adapting to growth, the urgency will wane after the surge associated with pre-loading and the East Coast strike runs out of steam, especially on the West Coast. Gross expects "the disconnect between strong import growth and tepid domestic demand to end".
"In the long term, there is no reason to expect growth in imported containers to outpace growth in domestic truck demand," he added.
Gross predicts that growth at West Coast ports will also slow as shippers look more to the eastern and Gulf Coast gateways, returning to the pattern of recent years. No matter who the next US administration is, migration from coast to coast will resume and purchases from China will continue to decline, he said.
Daniel Hackett points out that this is in line with the import trend in recent years. Trends in recent years have shown a decline in the share of Chinese cargo flowing through US container ports, with a corresponding rise in shipments from ASEAN countries and, more recently, from India, a development that benefits East Coast ports.
He noted that Houston's market share has doubled in the past 12 years, with New York/New Jersey, Virginia and Savannah also gaining share.
At a conference hosted by the Journal of Commerce and S&P Global, analysts focused on multimodal transport systems, particularly logistics through Southern California's container gateway.
Larry Gross, president of Gross Transportation Consulting, said the system is still handling increased container volumes even later in the year. He noted that last week was the busiest week of 2024 so far in North America, 10 weeks behind the traditional peak.
"Freight volumes in 2024 remain very strong," he said. He believes that freight volumes have continued to rise because of shipping activity offsetting upcoming import tariffs and the possibility of a second strike on the East Coast in January.
Daniel Hackett, a partner at Hackett Associates and co-author of the Monthly Port Tracker, noted that in the first 10 months of this year, U.S. West Coast ports handled 20.7 percent more imported cargo than in the same period in 2023, Imports at East Coast and Gulf Coast container ports rose 9.7% and 5.9%, respectively. Overall, port tracking shows that U.S. container imports are up 14.8 percent this year.
Gross pointed out that from ports to inland areas, the intermodal system handled elevated traffic without problem. "Overall, the company's performance is resilient," he said. Downstream capacity has been ample, from drainage to warehousing and chassis availability, he added.
He pointed to a slight weakness on the rail side, describing the speed of intermodal trains as "slightly below normal, but not catastrophic," adding that this had been offset by other indicators. He said the number of intermodal trains parked at the terminal was below normal and the number of fully loaded intermodal vehicles that did not move within 48 hours was below the five-year average. He concluded that the network was generally unstable.
The imbalance in imports and exports is a challenge for rail carriers because they have to ship large numbers of empty cars to the West Coast. Gross noted that the resulting container gap has soared to an average of 14,921 containers per month this year, up from 8,189 in 2023. In October this year, that number reached 22,014, equivalent to more than three trains a day.
Looking ahead, says Mark Sisson, senior port planner and analyst at AECOM, there is room for US container ports to grow without the need for new facilities. He reported that in terms of teu per 1,000 feet of dock, the Port of Los Angeles handled 260,000 teu, while the Port of Vancouver handled 391,000 teu. The number of TEUs treated per acre in Los Angeles is 4,800 TEUs and Vancouver is 7,800 TEUs.
He added that transferring containers to off-site locations by truck or rail can reduce pressure on terminals. He noted that BNSF is developing a 4,500-acre rail yard, intermodal facility and warehouse complex in Barstow that will be connected to the Los Angeles/Long Beach port complex.
Automation - a major bone of contention in contract negotiations between employers and labor at East Coast ports - could lead to additional capabilities, but so far the United States has shown less interest in that path than expected, Sisson said.
"In theory, all terminals can be automated, but very few do, especially outside of Southern California," he added.
In terms of adapting to growth, the urgency will wane after the surge associated with pre-loading and the East Coast strike runs out of steam, especially on the West Coast. Gross expects "the disconnect between strong import growth and tepid domestic demand to end".
"In the long term, there is no reason to expect growth in imported containers to outpace growth in domestic truck demand," he added.
Gross predicts that growth at West Coast ports will also slow as shippers look more to the eastern and Gulf Coast gateways, returning to the pattern of recent years. No matter who the next US administration is, migration from coast to coast will resume and purchases from China will continue to decline, he said.
Daniel Hackett points out that this is in line with the import trend in recent years. Trends in recent years have shown a decline in the share of Chinese cargo flowing through US container ports, with a corresponding rise in shipments from ASEAN countries and, more recently, from India, a development that benefits East Coast ports.
He noted that Houston's market share has doubled in the past 12 years, with New York/New Jersey, Virginia and Savannah also gaining share.
