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As manufacturers and importers look to get their goods to market as quickly as possible, we have begun to see a shift in import activity from the west to the east coast. Much has been publicized in the past several months regarding the lack of equipment and labor, primarily focused on the Los Angeles and Long Beach ports. Combined with an increase in import volume, primarily out of China, this resulted in ships sitting at anchor within eyesight of the coast. While that number has been reduced, it was not that long ago that over 100 ships sat stagnant. Many questioned why ships en route did not simply divert to a less congested port. For many reasons, just turning right instead of left was not possible.
However, now that manufacturers and importers have had time to assess the destination for their goods, we are starting to see a shift to the east coast ports. A great example is the volume at the Long Beach port versus the volume for the Charleston, S.C. port. The number of actual containers forecast to land in Charleston over the next week is almost 65 percent higher than this time last year as seen in Figure 1.1. Conversely, Figure 1.2 shows the volume for the same timeframe in Long Beach to be down about 5 percent. And as a potential work stoppage looms on the west coast in the next few months, anticipate the east coast to continue seeing an uptick in import volumes.
Looking at freight volume over the last 90 days, it is certainly lower than what we experienced last year at this time, but in comparison to prior years, still some 30 percent higher. Keep in mind that Texas, which is a top location for shipments originating and delivering domestically, was shut down for several days at the end of February 2021 due to an ice storm. This caused a sharp decline in volume initially, and then a rapid recovery which persisted into the Spring months. One would think that as rejection rates have dropped significantly, over 40 percent lower than the start of 2022, freight rates would be down sharply. Yes, rates have shown signs of retreating as you can see in Figure 1.3, but only by about 13 percent versus the high point in January. Much of what is keeping rates elevated above $3 per mile has to do with energy costs. Fuel remains above $5 per gallon, and some states flirting with $6 per gallon. By comparison, fuel in January averaged $3.70 per gallon. That equates to an additional $150 in fuel costs for a typical 700-mile trip. Expect rates to remain consistent until relief at the pump is realized.
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