This week:

• West Coast ports have a busy June ahead of peak season surge
• House passes bill supporting Baltimore, Oakland ports and waterways projects
• US warehousing about to hit “peak vacancy,” according to industry CFO
• FMC unveils new rules to level the playing field between exporters and shippers
• Retailers frontload as Asian imports grow in the second quarter

Busy West Coast Ports Ready for Healthy Peak Season Surge

In June, North America’s major West Coast ports — including Los Angeles, Long Beach, Seattle-Tacoma, and Vancouver — experienced 13.4% year-over-year import growth. Despite the continued surge, port managers say they have the capacity to handle a predicted healthy peak season. Port representatives point to improved dwell times in June as evidence of their ability to handle continued import volume growth.

The West Coast volume surge so far this year is due to several factors, including frontloaded fall and holiday merchandise and cargo diversions from East and Gulf Coast ports. In addition, West Coast ports have accommodated ten new trans-Pacific services this year. Despite the busy year so far, West Coast port managers say they’re operating somewhere between 50 and 80 percent of capacity at any given time. The officials indicate the ports are prepared for further diversions from US East and Gulf Coast ports if an ILA strike happens.

US imports from Asia increased 12.1% in June amid retailers predicting continued growth during the peak shipping season. Ports and railroads are working together to share data and cargo projections so that both can adjust operations as necessary.

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House of Representatives Passes Ports and Waterways Projects Bill

The US House of Representatives approved the Water Resources Development Act (WDRA) on Monday, June 22. The bill authorizes $4.3 billion in spending on projects to improve ports and waterways. This includes funding for widening and deepening the Baltimore harbor and widening Oakland’s turning basin. Both projects aim to enhance navigation and reduce emissions.

The US Senate’s version of the bill awaits a final vote, after which both chambers will forge a version to submit to President Joe Biden for approval.

The WRDA, as passed by the House, authorizes several storm and flood mitigation projects. The House version also addresses inland waterways and improvements to US port safety and efficiency.

CFO: US Warehousing Space May Be Nearing “Peak Vacancy”

In an earnings call earlier this month, Timothy D. Ardnt, CFO of industrial real estate and logistics firm Prologis, spoke of several reasons for the US warehousing industry to be optimistic. Despite current ample warehouse availability, the US could be approaching “peak vacancy,” Ardnt said.

“There are several encouraging signs for demand, including port volumes on both the East and West coasts, as well as increased volume of proposal activity we’ve seen across our portfolio,” Ardnt said on the call. He also pointed to the impending completion of several new construction projects and fewer new developments as drivers that will tighten capacity and drive up prices in 2025.

Due to the freight downturn that began in spring 2022, shippers have scaled back warehousing expansions, choosing lease renewals over seeking new spaces. Ardnt expects this trend to shift as the warehousing space market tightens throughout the rest of 2024.

Maritime Commission Unveils New Rules for Working With US Exporters

The US Federal Maritime Commission (FMC) unveiled proposed new regulations last week aimed at ensuring fairness for exporters in the shipping industry. If approved, the rules will require ocean carriers to document their export policies, provide adequate loading time for ships, and notify shippers of schedule changes.

The proposed regulations are in response to concerns raised earlier by US exporters — agricultural shippers in particular — who have faced challenges with carriers prioritizing higher-paying import cargo over their exports. Perhaps the most impactful rule is a requirement for carriers to file “documented export policies” annually. The policies must outline the carriers’ services, pricing, and equipment availability for US exports. The documentation will help the FMC determine if carriers unreasonably refuse export cargo.

While ocean carriers can refuse exports for safety or operational reasons and are not obligated to provide export capacity on “sweeper vessels,” under the new regulations the FMC would review instances where carriers designate ships as sweepers.

The regulations await approval and publication but are expected to take effect soon. Industry observers see the new rules as a significant step toward balancing the interests of ocean carriers and exporters in the US shipping industry.

Retailers Frontload in Response to World Events, Asian Imports Grow

US imports from Asia surged in the second quarter of 2024, driven by retailers frontloading cargoes due to fears of a labor strike by the International Longshoremen’s Association (ILA) on the East and Gulf Coasts, and continued diversions around southern Africa.

According to import and export data provider PIERS, June saw the second-highest import volume since August 2022. The potential labor unrest and increased transit costs have led to significant diversion to the West Coast, where the Port of Los Angeles is experiencing ever-growing volumes. The growth in Asian imports is also partly due to retailers underestimating demand, according to an analysis by PIERS.