The barometer of global supply chains—U.S. container imports—has finally shown signs of recovery after months of volatility. But does this indicate the end of the global trade downturn, or is it merely a temporary rebound? Descartes' latest global shipping report reveals the truth behind the numbers.
Descartes, a Canadian logistics software-as-a-service (SaaS) provider based in Waterloo, Ontario, released its February global shipping report (19th edition, initiated in August 2021), showing a significant uptick in U.S. container imports. After months of decline, imports have returned to growth. Specifically, U.S. container imports reached 2,068,943 twenty-foot equivalent units (TEUs) in January, marking a 7.2% increase from December's 1,929,032 TEUs. Notably, December's imports had fallen 1.3% month-over-month. The January growth represents the largest December-to-January increase in six years.
While the month-over-month data is encouraging, year-over-year imports still fell 16.1%. However, the report notes that this figure is only 0.3% below pre-pandemic January 2019 levels, suggesting a relatively stable recovery. The report also highlights that while the Lunar New Year occurred in January, its lagged impact on imports will become apparent later this month and in March.
Key Findings: Decoding the Data
Beyond the overall import growth, Descartes' report reveals several critical insights into the complexities of global supply chains and their future trajectory:
- Port congestion eases with regional disparities: While port delays continue to improve, progress is concentrated primarily on the East Coast. West Coast ports lag behind, likely due to ongoing labor negotiations.
- Strong rebound in Chinese imports: Imports from China surged by 11% month-over-month to 762,967 TEUs in January. However, this still represents a 24% decline from August 2022 levels. China's share of U.S. container imports now stands at 36.9%, down from a peak of 41.5% in February 2022, reflecting both China's enduring importance and the challenges posed by diversification trends.
- Persistent pandemic effects: Though the global economy is emerging from the direct impacts of COVID-19, long-term disruptions—including labor shortages and production delays—continue to affect trade efficiency and stability.
- Unresolved West Coast labor negotiations: Ongoing labor talks at West Coast ports create operational uncertainty, potentially disrupting cargo flows and overall supply chain efficiency.
- Economic resilience: Despite numerous challenges, the U.S. economy has shown unexpected strength, supporting container import growth.
Port Performance: East Coast Gains Momentum
Among the top 10 U.S. ports, container imports increased by 107,059 TEUs month-over-month, with all ports except Savannah showing growth. Key performers include:
- Long Beach: +35,054 TEUs (14.4% increase)
- Houston: +28,963 TEUs (22.4% increase)
- New York/New Jersey: +20,005 TEUs (6.4% increase)
- Los Angeles: +9,767 TEUs (2.8% increase)
- Tacoma: +6,016 TEUs (13.9% increase)
Chris Jones, executive vice president of industry and services at Descartes, noted that January's 7.2% growth was unexpected: "This is the first time we've seen a directional change that aligns with 2019 levels and truly begins to match pre-pandemic import volumes."
Cautious Optimism: Is This a True Recovery?
When asked whether the return to 2019 import levels should be celebrated or viewed as inevitable, Jones suggested both perspectives hold merit. "Overall, the prevailing sentiment has been more pessimistic, particularly regarding economic forecasts," he said. "I think another downturn would surprise people now. But if you examine the last two quarters, our GDP has been growing—2.9% in Q4—which is solid."
Coastal Market Share: Relative Stability
The report found stable market shares between East and West Coast ports. In January 2023, the top five East Coast and Gulf Coast ports accounted for 45.2% of total imports (down 0.3% from December 2022), while West Coast ports gained 0.5% to reach 38.6%. Since October 2022, West Coast ports have recovered 2.0% in market share from a 36.6% low.
The top 10 ports collectively handled 84.0% of total imports in January, up from 83.6% in December. However, their long-term market share has been steadily declining since mid-2022, well below the peak of 86.6% in early 2022.
Drivers and Risks: What Lies Ahead?
Several factors will shape the future of container imports and global supply chains:
- Consumer demand: Despite inflation and economic uncertainty, U.S. consumer resilience remains strong, supported by stimulus measures and a stable labor market.
- Inventory adjustments: Businesses that rushed to restock depleted inventories may now moderate their import volumes as supply chains normalize.
- Supply chain diversification: Geopolitical tensions and trade friction are accelerating efforts to diversify supply sources, potentially reshaping import patterns.
- Transportation costs: Fluctuations in freight rates, fuel prices, and vessel capacity will influence import demand.
- Policy impacts: Trade policies, tariffs, and regulations could significantly alter import volumes.
Strategic Recommendations for Businesses
To navigate ongoing supply chain challenges, companies should consider:
- Enhancing risk management systems to identify and mitigate potential disruptions
- Optimizing inventory through data-driven forecasting
- Diversifying supplier networks to reduce dependency
- Investing in digital technologies like AI and IoT for greater supply chain visibility
- Strengthening collaboration with partners across the supply chain
- Incorporating sustainability into supply chain strategies
- Developing talent with specialized supply chain expertise
While January's rebound offers hope, global supply chains remain vulnerable to geopolitical risks, trade conflicts, and other disruptions. The path forward will likely emphasize digital transformation, sustainability, and regionalization as businesses adapt to an evolving trade landscape.