Big ports got bigger in 2020 while meeting the COVID-19 challenge

U.S. container seaports endured a series of disruptions caused by the COVID-19 pandemic in 2020 but ended the year with a record level of volumes handled. Panjiva's data shows U.S. seaborne imports of containerized freight reached 2.93 million 20-foot equivalent units, or TEUs, in 2020, a rise of 1.7% year over year despite the ravages of the pandemic during the first and second quarters.

Much of the growth was due to the rapid reemergence of Chinese ports from the pandemic, with shipments that rose 4.7% year over year as a whole. The previously fast-growing supplier nations in Asia excluding China climbed 5.5%. Yet, imports from Europe fell 11.5%, delivering their worst year in TEUs terms since 2016 as economies there struggled to recover.

The global trade economy passed through three phases as a result of the pandemic, as discussed in Panjiva's Jan. 11 research. Early closures of the Asian economies resulted in a 5.2% year-over-year drop in imports in the first quarter of 2020, with even healthcare imports down 3.6% as countries engaged in medical protectionism. The biggest contributor to the drop, though, was a 10.3% slide in imports of consumer discretionary products as Asian factories closed.

A further downturn occurred in the second quarter as most economies in the world experienced commercial and industrial closures due to widespread shelter-in-place orders. U.S. seaborne imports were down 11.1% year over year during the period. An 18.0% slide in consumer discretionary products, including autos, and an 11.0% drop in materials showed the economic weakness across the consumer and industrial segments. 

A more disciplined approach to capacity management by the container lines than that shown in the 2016 activity dip ensured the major liners were able to continue business as normal.

The reopening of economies led to a surge in shipments in the third quarter, which accelerated to an 18.6% jump in the fourth quarter with healthcare, consumer durables and staples (including home and personal care goods) all accelerating.

However, the ports struggled to keep up with congestion starting on the West Coast and spreading from there. The container lines raced to accept deliveries but then had to wait for delivery slots as port managers sought to keep up with equipment shortages and the overriding need to keep staff safe and healthy.

The largest ports also experienced the fastest growth, potentially reflecting conservative attitudes toward route management later in the year. Panjiva's data shows that imports to the ports of New York/Newark and Long Beach, Calif., climbed 8.1% and 8.0% year over year, respectively, in 2020. Meanwhile, Los Angeles expanded by just 2.6%, perhaps reflecting a higher degree of congestion later in the  year. The other West Coast ports did not share in the southern Californian bounty. Imports to Seattle and Tacoma, Wash., were down 3.4% and 2.8%, respectively, while those to Oakland, Calif., only rose 0.5%.

The historically more successful East Coast ports continued to outperform. Savannah, Ga., increased 3.4% in the year and by 7.3% over the past five years following extensive investments, including expanding inland port operations. Houston expanded 2.2% despite significant storm challenges during the year. Houston may also have attracted traffic away from other regional ports, with imports to New Orleans and Jacksonville, Fla., down 16.0% and 10.1%, respectively.

As 2021 begins, there are few signs that much has changed. U.S. seaborne imports climbed 13.9% year over year in the first half of the first quarter, including a 31.6% surge in consumer staples products and a 24.1% rise in consumer discretionary.

Port congestion remains a challenge, leading liners including CMA CGM SA to shift their services to alternative ports, with the Lunar New Year holiday break potentially not being as deep as normal as Chinese factories remain open. Continued elevated shipping rates provide a sign that the tight supply-demand balance may be set to continue.

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.