North American container import volumes to continue slide in 2022: Hackett Associates

North American container import volumes may have peaked in 2021 as slower port throughput and changes in consumer spending dampen the outlook for 2022, according to Ben Hackett, principal at trade consulting firm Hackett Associates.

Although the Southern California ports of Los Angeles and Long Beach posted a combined Western Hemisphere record of 20.1 million TEUs handled in 2021, their biggest growth rates were in the first half of the year, which papered over both ports reporting declining year-on-year volumes in the fourth quarter as congestion worsened.

The Port of Los Angeles in December handled its smallest monthly volume, at 786,589 TEUs, since June 2021. Total exports in December including empty containers exceeded total imports for the second month in a row, a situation not previously observed since March 2019.

"The main culprit throughout this in our opinion is that the impacted workforce across the supply chain has seen less workers as they have been either ill or isolating to avoid catching [COVID-19]," Hackett said in a webcast hosted by the Journal of Commerce. "And that's been from docks to drivers to warehouses across the supply chain."

Throughput at West Coast North America ports is forecast to decline to 3.57 million twenty-foot equivalent united in the first quarter of 2022 from 3.72 million TEUs in the same quarter in 2021, Hackett said. Second-quarter 2022 volumes West Coast are expected to be flat at 3.94 million TEUs for 2022 versus 3.96 million TEUs in 2021, but there is potential for third-quarter growth to 4.0 million TEUs in 2022 versus 3.86 million TEUs in 2021.

"Looking at the West Coast, our projection is that 2022 will be at best flat, and possibly negative growth in the new year," Hackett said. "In short, don't expect a repeat of the stellar growth we've seen in 2021."

Ports across North America, but particularly on the West Coast, have experienced declining throughput amid longer dwell times for cargoes in terminals that were taking away space away for arriving ships to unload. The shortage of warehouse and distribution center workers slowed turn times for truck chassis taking containers out of the port terminals.

As a result, dwell times at the dual ports of Los Angeles and Long Beach increased to seven-eight days on average in October 2021 from less than four days in April, Hackett said. Total US containerized import volumes dropped 3.8% in July-December 2021 from the same period in 2020.

"Online shopping requires increased warehousing... [the supply chain] started breaking down as warehouse space became scarce, particularly on the west coast," Hackett said. "The shift to e-commerce had been predicted -- the growth rates were there -- but they came ahead of schedule and they seem to be permanent."

The downward trend of North American import volumes is expected to continue in the early part of 2022 amid the spread of the highly contagious omicron variant and the slowdown in Chinese exports during Lunar New Year, which began on Feb. 1.

Consumer spending driving the import boom could also finally be curtailed by rising inflation. The US consumer price index climbed 7% in 2021 -- the largest 12-month gain since 1982 -- and supply chain issues and rising shipping costs were key contributors. The Platts Container Freight Index, a weighted average of Platts' global assessments, was assessed at $6,860/FEU on Feb. 4, an increase of 61% from $4,265/FEU on the same date last year.

"If inflation does not moderate, we can expect retail consumption to continue to weaken as consumers put more money into savings in case of higher inflation or in case of problems with [COVID-19]," Hackett said.