Inbound cargo volume at the nation’s major container ports is on track to enter its traditional “winter lull” after the peak season rush, but geopolitical strife and violence in the Red Sea is beginning to have an impact on that historical pattern, according to the National Retail Federation (NRF).
A growing number of container lines are currently avoiding the Red Sea and the Suez Canal, following missile and drone strikes on ships triggered by expanding ripples of violence from Israel’s bombing of Gaza after a surprise attack by Hamas in October. That change in routes has added time and expense to cargo movements as ships sail around the distant southern end of Africa instead of cruising through the Mediterranean.
In a typical year, inbound cargo volumes to the U.S. gradually slows during the first quarter of the new year before beginning to build again in the spring. So far, that pattern is holding true in 2024, but businesses and consumers may see delayed deliveries and higher prices due to the Red Sea violence, according to the Global Port Tracker report released today by the NRF and Hackett Associates.
“This is the traditional slowdown when the supply chain gets a break after the busy holiday season, but there’s always a new challenge on the horizon,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a release. “Attacks on cargo ships in the Red Sea have been in the headlines and the disruptions caused by those attacks have once again created volatility in retail supply chains. Retailers are working with their carrier partners on mitigation strategies to limit the impact, but we are seeing longer transit times and increased costs as a result.”
Any effect from the Red Sea attacks would most likely come at East Coast ports, Hackett Associates Founder Ben Hackett said in the report. Most cargo headed to the East Coast from Asia comes across the Pacific and through the Panama Canal. But some comes through the Red Sea before crossing the Atlantic, and carriers’ decision to go around the Cape of Good Hope to avoid the attacks is adding five or six days to the month-long trip from Shanghai to Savannah via the Suez Canal. And some retailers are reporting delays of as long as two weeks.
“The number of containers arriving at East Coast ports should not be directly affected if carriers add ships to maintain capacity, but shippers will have to adjust their supply chains to cope with longer transit times,” Hackett said. “We may see an increase of Asian cargo arriving at West Coast ports and then shipped east via intermodal rail, but doing so is costly and does not save that much time. As might be expected, carriers are passing on the additional voyage costs and then some.”
U.S. ports covered by Global Port Tracker handled 1.89 million twenty-foot equivalent units (TEUs) in November, the latest month for which final numbers are available. That was down 8% from 2.06 million TEU in October, which was the busiest month of the year and the peak of the fall shipping season, but up 6.6% from November 2022.
Ports have not yet reported December numbers, but Global Port Tracker projected the month at 1.89 million TEU, up 9% year over year. That would bring 2023 to 22.3 million TEU, down 12.8% from 2022. Imports during 2022 totaled 25.5 million TEU, down 1.3% from the annual record of 25.8 million TEU set in 2021.
Gartner, Inc.
