The international shipping industry is no stranger to choppy waters. Disruptions, delays, and ever-fluctuating costs are all part of the voyage. However, the recent podcast by The Freight Buyers’ Club, sponsored by Dimerco Express Group, highlights a potential storm brewing on the horizon – a significant cargo surge on the US West Coast.
The podcast features key industry experts, including Noel Hacegaba (COO, Port of Long Beach), Bjorn Vang Jensen (Executive Director for International Transport, Cummins), Alexander King (Branch Manager, Dimerco Express Group), Jon Gold (VP for Supply Chain and Customs Policy, National Retail Federation), and Matt Schrap (CEO, Harbor Trucking Association).
This blog delves into the insights shared by these experts, exploring the factors contributing to this potential shift, evaluating the readiness of West Coast ports, and considering the implications for businesses engaged in international trade.
East Coast Woes Pushing Shippers Westward
The East Coast is facing a trifecta of challenges prompting shippers to reconsider their routes. According to Noel Hacegaba, COO of the Port of Long Beach, disruptions in the Red Sea, challenges at the Panama Canal, and impending labor negotiations on the East Coast are compelling factors. These issues collectively contribute to delays, increased shipping costs, and uncertainties in East Coast operations.
Bjorn Vang Jensen, Executive Director for International Transport at Cummins, emphasizes the need for shippers to reassess their strategies. The Red Sea crisis and Panama Canal restrictions are elongating transit times, making West Coast routes more appealing. Jon Gold, VP for Supply Chain and Customs Policy at the National Retail Federation, echoes these concerns, stating that members are planning to shift back to the West Coast due to labor negotiation uncertainties on the East Coast.
Transpacific Dynamics
Alexander King, Branch Manager at Dimerco Express Group, spoke about the transpacific trade, highlighting how it serves as a “critical artery connecting Asia to the biggest consumer market in the world, which is the USA.”
While the East Coast has historically drawn cargo due to booming local economies, West Coast ports often serve as distribution hubs even for East Coast customers thanks to faster Asia-to-West Coast shipping. King highlights that cost often outweighs speed, with Midwest-bound cargo in 2023 taking the cheaper East Coast route despite longer timeframes. However, a recent shift suggests cargo might be heading back West, hinting at potential changes in the equation.
West Coast Calling: Can They Handle the Influx?
With the East Coast facing these challenges, the spotlight is shifting to the US West Coast. Shippers are cautiously exploring the possibility of rerouting cargo volumes to West Coast ports. But can these ports handle a potential surge?
Noel Hacegaba asserts the Port of Long Beach’s readiness, citing latent capacity, resilience during the supply chain crisis, and lessons learned. Matt Schrap, CEO of the Harbor Trucking Association, echoes this sentiment, stating that ample capacity, available chassis, and terminal space are in place to meet any demand uptick.
Data Highlights West Coast Growth
Early indicators suggest that a shift is already underway. S&P Global Market Intelligence data reveals a rise in the share of seaborne imports to US West Coast ports. Import container throughput at Los Angeles and Long Beach ports saw significant year-on-year growth in January 2024, reflecting a 17% increase in overall cargo volume on the West Coast.
The Negotiation Room Holds the Key
The ultimate decision on cargo routing will likely unfold during upcoming contract negotiations between shippers and ocean carriers. Shippers will weigh the potential benefits of West Coast routes against the risks of disruptions, considering factors such as transit times, landed costs, and schedule reliability.
Impact on Businesses and the Logistics Landscape
A potential cargo surge on the West Coast will have a ripple effect across various industries. Businesses reliant on timely and cost-effective cargo movement will need to adapt to the changing landscape. Here are some key considerations:
- Supply Chain Re-evaluation: Businesses heavily reliant on East Coast ports may need to reassess their supply chain strategies.
- Agility is Key: Businesses with flexible logistics partners will be better equipped to navigate the evolving logistics landscape.
The potential cargo surge on the US West Coast signifies a significant development in the international shipping industry. While the final decision rests with individual shippers, it’s evident that the West Coast is gearing up for a potentially busy season. Businesses involved in international trade should stay informed about these developments and collaborate with experienced logistics partners like Dimerco to ensure a smooth and cost-effective journey for their cargo. Don’t let shipping headaches slow you down. Contact a Dimerco international shipping expert today to discuss how we can help you navigate these evolving times.