Risk Center

West Coast cargo flows muted by decreased Chinese manufacturing

The PMA and the ILWU remain committed to negotiating in good faith towards a labor agreement, but uncertainty around timing is changing the ocean cargo shipping environment in the U.S. With no deal expected until early next year, West Coast ports are at risk of permanently losing cargo volumes to East and Gulf Coast ports.

Cargo flows to the U.S. West Coast have dropped in the past year due to uncertainty around the negotiations and manufacturer lockdowns in China. To balance supply with demand, ocean carriers have been utilizing active capacity management strategies including blank sailings and suspending services.

Container volumes from China to the U.S. have tapered off significantly since the summer and will continue to fall. The decrease will exert a downward strain on freight rates from Asia to North America. Even if a new deal between the ILWU and PMA can be reached in early 2023, cargo flows may be slow to return to usual levels as freight traffic from Asia to the U.S. will drop for the Chinese New Year beginning on January 22. Declining consumer demand has prompted some Chinese factories to close two weeks earlier than normal which will prolong the period of muted cargo flows from China to the U.S.

On December 2, President Joe Biden signed legislation to prevent a nationwide U.S. railroad strike by workers of Class-I carriers. The agreement forces workers to accept the most recent proposal from carriers, including a pay increase and improvement in worker benefits. However, the new agreement failed to include any provisions for sick leave, a major demand by unions. The Biden Administration has been heavily involved in the talks between the PMA and the ILWU thus far but is unlikely to ramp up involvement any time soon as the two sides are committed to negotiating in good faith. President Biden could invoke the Taft–Hartley Act to order ILWU members to work, last used by President Bush in 2002, though this would only enact an 80-day cooling-off period.

Waiting time trends 

West Coast ports saw a small spike in congestion levels after several weeks of falling average waiting times. The increase in overall waiting times was driven by increases at the Ports of Los Angeles-Long Beach, Vancouver, and Seattle.

East Coast congestion levels continued a general downward trend, but elevated wait times are still occurring at the Port of Savannah and the Port of New York-New Jersey.

Gulf Coast ports continue to improve as far as overall congestion, although some ports still face challenges from increased wait times and vessel counts.

Everstream clients are receiving more detailed insights and recommendations about this risk.

Contact us to learn how we can give you a complete view of the risks affecting your end-to-end supply chain and what you can do to mitigate them.

Share this post

Up Next

December 15

Factories closing early for Chinese New Year will further reduce manufacturing output.

Get News