The Weekly Roar

In this week’s Roar: U.S. East vs. West Coast ports, port capacity absorption, supply chain cybersecurity, U.S. trade flows, and a report on containers lost at sea.

Here’s one more spin on the shift in import volume from the U.S. West to East Coast ports. The weather is having an impact on trade through the Panama Canal. A worse-than-normal drought season is causing draft issues and reduced capacity. In response to the Panama Canal Authority (ACP) reducing maximum draft, transpacific carriers will impose much higher than usual surcharges beginning June 1 for all water services on the Asia/US east coast trade lane. Some services will be redirected via the Suez Canal—an artery that’s had its own problems in the last few years. Hapag-Lloyd has stated that their surcharge—a PCC (Panama Canal Charge)—will be $500 per container.

Before the pandemic, a report by Sea-Intelligence shows that US ports were holding their own in terms of the median time vessels spent in port—averaging just under 17 hours. The height of COVID pushed the average up to about 20 hours, causing huge disruptions. What’s interesting is the correlation between the increased time in port and capacity absorption—the amount of time a fleet’s vessel is stuck in port and unavailable. When you put the two together you can better calculate the amount of berth capacity lost due to longer port stays.

Back in December 2022, the Port of Lisbon was hit with a ransomware attack, and in the last month, three Canadian ports were also targeted. This highlights the need for increased cybersecurity in the industry since all maritime infrastructure—including ports—has increasingly become the target of hackers. The European Union has approved new cybersecurity regulations that will force any companies that are critical to supply chain infrastructure to beef up security.

U.S. trade flows are seeing a shift that returns things to pre-pandemic norms. After a few years of import volume growth, levels are just above what they were in 2019. Unfortunately, that translates to a drop of 31.2% drop in March. However, what happens in the second half of this year is still uncertain—hopes are that some recovery in volume is possible, but risks remain. One most notable decrease in imports was in the home improvement and home furnishings sectors, which surged nearly 25% in 2021 but fell by 5.5% in 2022. A decline in the U.S. housing market and escalating inflation are a large part of the problem.

The 2023 update of the Containers Lost at Sea reports shows a significant drop. The average loss of containers—at least in the 15 years data has been collected and reported—is about 1,566 for the entire span of years and 2,301 for the last year 3 years. However, for 2022 there were only 661 containers lost—nowhere near the 2,000 plus lost in 2021 and nearly 4,000 in 2020, which amounts to a 400% increase for those years. This puts 2022 losses at 0.00026% of all containers transported in the year. However, John Butler, President & CEO of the World Shipping Council (WSC) warns against complacency, stating that “Every container lost at sea will always be one too many and we will continue with our efforts to make the sea a safer place to work and to protect the environment and cargo by reducing the number of containers lost at sea.”

For the rest of the week’s top shipping news, check out the article highlights below.