Operations at ocean terminals throughout the U.S. are running at normal levels and are expected to do so for the remainder of 2023, but West Coast ports could see a return to congestion in the new year, according to a report from ITS Logistics.
Looking to 2024, trucking capacity is expected to continue exiting the market as freight rates dip below operating costs, and could be compounded by California’s pending ban on new internal combustion truck registrations for drayage. West Coast ports also face the possibility of significant congestion, the levels of which have not been seen in almost a year, ITS said in its “December Port Rail Ramp Index.”
“Today’s lower inventory levels could equal a more pronounced Lunar New Year peak than we saw in 2023,” Paul Brashier, Vice President of Drayage and Intermodal for ITS Logistics, said in a release. “Combine that with transpacific volumes being diverted from the East Coast as shippers avoid both the Panama and Suez Canal and it could quickly cause significant congestion.”
Exiting capacity in the market could worsen congestion and increase rates. ACF Drayage Truck Requirements in California ban any new registration of internal combustion trucks, which is expected to have a chilling effect on capacity and potentially drive more of it out of the market, the report said. In addition, there is the potential for labor unrest launched by the International Longshoremen’s Association (ILA) at the East and Gulf Coast ports, which could drive even more volume to West Coast ports and increase the chances of disruption, ITS said.
“ILA labor negotiations will be ongoing up until September,” Brashier said. “If labor unrest occurs and more volume is driven west, it will be interesting to see if the West Coast ports and infrastructure is prepared to handle that surge in volume as capacity exits the market.”
In the meantime, ports are primed to see increasing turmoil as the Panama Canal continues to experience congestion for non-containerized cargo due to water levels and additional charges on containerized goods, and as several shippers have chosen to avoid the Suez Canal completely in response to an increased number of drone attacks in the Red Sea and Gulf of Aden.
