The “Top 20 North American Ports” charts are evaluated by tonnage and TEUs. The principal reason for this approach is reflected in the nature of trade itself in North America. In most cases, ports are measured by the number of containers they handle. The ports of Los Angeles, New York/New Jersey and Long Beach have long been the top three. In 2022 the Port of New York/New Jersey took over the second spot but in 2023 the Port of Long Beach regained the number two position. This flip flop in port position is representative of some overall trends in ocean trades in North America. Overall, container throughput in 2023 in North America is slightly off from 2022, reflecting the flattening of demand. But there are other factors at play. Since the West Coast waterfront labor disruptions in 2015, there has been a slow but steady erosion of West Coast port market share. The East Coast ports like New York/New Jersey, Savannah, and Port of Virginia (Norfolk) and Gulf ports like Houston benefited from an expanded Panama Canal and Southeast Asian and Indian Subcontinent trade volumes moving through the Suez Canal, especially during the post COVID-19 boom. A great example of the impact is the TEU volumes in Port of New York/New Jersey in 2020-2022 period. In 2020 The Port of NY/NJ handled 7,585,819 TEUs. This tally rose a remarkable 18.5% in 2021 to 8,985,931 TEU and another 5.7% in 2022 to 9,493,664 TEU, which vaulted it to the number two ranking container port in the US.
Another factor in the shift to the East Coast and Gulf ports was investment. With the promise of greater box volumes came more investments in East Coast and Gulf ports enabling the ports to handle greater volumes more efficiently.
The Port Flip Flop
Fast forward to 2023 and 2024. There are problems with the Panama Canal low water levels and prolonged drought, coupled with the Houthis attacks in the Red Sea that has all but closed the Suez Canal to ship traffic and has forced containership operators to divert to much longer alternative routes. (see Stuart Todd article, “Trucknet sets up Gulf-Israel/Egypt ‘land bridge“) At this writing, the Panama Canal low water situation has forced the Canal authorities to announce a cut in transits of 36% on January 17, 2024, even as ship traffic jam grows at the entrances.
Diversions around the African continent have added miles, time, and cost to box ship transits from Asia to Europe. The diversions have also turned the Mediterranean into an inland sea and cut the US East Coast off from the trans-Atlantic loops that connected Europe to Asia through the Mediterranean. Or in the case of North America, re-emphasized using the continent’s West Coast ports. And similarly, to the 2015 period of labor unrest on the West Coast, there is the possibility of waterfront labor disruptions on the East Coast in October — just prior to the Presidential elections — as the International Longshoremen’s Association (ILA) negotiates a new pact with East Coast and Gulf waterfront management. The ILA’s pact expires on September 30th, 2024, and over the past year there was hope expressed by all parties that the agreement could be fast tracked but that now seems unlikely.
But with the new dynamics will the West Coast ports reprise their role as the gateways of choice in the future? Certainly, the San Pedro ports of Long Beach and Los Angeles look to remain North America’s dominate gateway. In a January 10th, 2024, article on [url=http://www.ajot.com]http://www.ajot.com[/url] by Stas Margaronis, “LA’s Seroka says ports of LA & Long Beach increased market share in 2023“, Port of Los Angeles executive director Eugene Seroka reported, “We were pleased to see a 3% bump in our West Coast market share compared to East and Gulf Coast ports. Working together with our partners at the Port of Long Beach, we have made San Pedro Bay the country’s biggest gateway – nearly double the size of the next largest port complex.”
But the outlook came with an interesting caveat as Seroka noted, “While … our 2023 total volume was more than 8.6 million twenty-foot units, down about 13% compared to 2022. That’s a dramatic recovery from the decrease of more than 30% we saw after the first quarter of the year.”
From a long-term perspective, the drought in Panama could end in the next cycle of weather, the Houthis could end their blockade of the Red Sea transits and the ILA could ink a new contract with management and the shift of market share to East Coast and Gulf ports could reboot. Still, in the short term, West Coast ports, as Seroka noted, will be on the march rebuilding their market share of North American box traffic.
Bulk Tonnage A Big Deal
Although the container business is the one that makes the headlines, bulk tonnage is a big deal for US ports. And it is worth examining the differences in the business. The container business is heavy on the inbound leg — essentially high value consumer goods — while outbound there is less freight, and it is often heavier and less valuable. This dichotomy in trade of inbound to outbound, has meant it is always difficult for containership operators to balance their inbound and outbound loads, complicating the positioning of containers.
On the other hand, the US is a major exporter of bulk cargo which is largely handed by bulk and breakbulk vessels and are often loaded at private terminals, as opposed to “public” container terminals. Although there is some overlap between bulk freight and container movements it is relatively small in relation to the overall bulk trades. And the bulk trades are big.
For instance, in 2022 the United States exported around 161 million tons of agricultural products worth $169 billion. Add to that number the US exported 3.6 million barrels a day (or about 540 million/tons/day) of crude oil in 2022. Although China was formerly a major importer of US oil, that dynamic changed with Russia’s invasion of the Ukraine. As the Energy Information Agency (EIA) reported since early 2022, trade patterns have shifted because of Russia’s full-scale invasion of Ukraine and the ensuing Western sanctions of Russia’s crude oil exports. Prior to 2022, OECD Europe had been the largest regional importer of Russia’s crude oil, receiving 2.3 million b/d from Russia in 2021.”
For these reasons, there is a predominance of Gulf ports in the tonnage list. The Port of South Louisiana, Port of Corpus Christi, Port of Greater Baton Rouge, Port of Beaumont, and Port of Houston are all big tonnage ports.
The boom in both petroleum and agricultural exports has benefited the Gulf ports. A recent report by the Port of the Port of Corpus Christi, is similar to what has been experienced throughout the Gulf port region. Corpus Christi reported setting a new tonnage mark in 2023, stating the 203 million tons moved in 2023 was an 8.1% increase from the prior year. The result was because of “a jump in crude oil exports to 126.1 million tons in 2023, a 12.5%. increase compared to 2022” along with 13.5% increase in agricultural commodities to a little over 2.2 million tons.
With heavy demand for agricultural and petroleum products, the “bulk” tonnage ports are likely to be setting more new records in the year to come.