As the coronavirus continues to show its teeth and weigh on global economic growth, seaborne container volumes are not exempt and face a decline year-on-year. Loaded container imports on the US West Coast (USWC) paint this picture well with 2.2 million TEU imported in the first quarter, representing a 14% drop year-on-year and a loss of 0.36m TEU. In the same period, there was no good news in sight on the export side either, as exports of loaded containers declined 2% to 1.2m TEU.
Trade tensions and slowing economic growth had already caused USWC imports of loaded containers to decline by 5% in 2019. Imports in the first quarter of 2020 are the lowest since 2015, highlighting the massive challenges that container carriers face.
The decline in container volumes in the first quarter is a result of the supply disruption in China in February, when manufacturing activity and hinterland logistics grinded to a halt due to the coronavirus. With China now back on its feet, the disruption to supply chains should start to abate. However, the demand side is now faltering with many of the major consuming nations under societal lockdowns. The effects of this will be felt in the coming months on US container imports.
Directly struggling with the lower throughput are the US ports. Container carriers can, to some extent, mitigate the exposure to low container volumes and freight rates by blanking sailings. No such quick fix exists for ports. Instead, they will be forced to cut costs wherever possible. The Port of Virginia has already exercised such measures by temporarily closing a terminal and reducing opening hours for truck gates, as there is currently little hope of a quick recovery.