The first half of 2020 saw unprecedented swings in the U.S. and global economies, with trade and port activity being directly affected. The good news, as of this writing, is that many U.S. states and countries around the world are cautiously reopening. Barring setbacks in controlling the coronavirus, the worst may be over, and a successful vaccine would be an additional positive stimulus. At this point in 2020, we can only echo Mark Twain’s lament that “prediction is difficult—particularly when it involves the future.”
Trends to Watch
- The East Coast gateways fared somewhat better than the Pacific Coast ports during this pandemic-stricken first half of 2020. As a result, the steady coastal share gain by the Eastern ports continued. This trend has remained roughly constant over the past decade. This partly reflects the fact that a high share of West Coast cargo volume comes from China—the trade lane that was most impacted by the coronavirus. The balance stands at 46% for the Eastern ports we track at the halfway mark in 2020, up from just 36% in 2010.
- U.S. importers are currently seeking to diversify sourcing away from China. Vietnam and other Southeast Asian countries are the main beneficiaries of this shift. The declining U.S. imports of containerized products from China has been notable, particularly during 2019 and 2020, due to tariffs, the pandemic and a general deterioration in U.S.-China relations.
- This sourcing shift will affect the relative advantage of U.S. port gateways. Ships can sail efficiently from East Asia origins such as Shanghai, Korea and Japan directly to the U.S. West Coast and to East Coast ports via the Panama Canal. For origins from Hong Kong south—e.g., Vietnam, Singapore, Indonesia and the Indian Subcontinent—the distance is greater to the U.S. West Coast, shifting the coastal advantage slightly toward East Coast ports. The shorter route from Southeast Asia to the East Coast transits via the Suez Canal rather than Panama (see figure below). This means that as Asian sourcing shifts to the south, the U.S. East Coast will be increasingly favored. And ports like New York, closer to the Mediterranean, may gain volume to the Midwest at the expense of Southern ports such as Savannah.
Download the full report for a more in-depth look at port activity.