North American Cargo Volume Nearing Pre-Pandemic Levels

North American cargo volume nearing pre-pandemic levels
Cargo container volumes at the 14 major North American ports tracked by CBRE are falling back to pre-pandemic levels. After reaching record highs in 2022, volumes declined by 18.6% year-over-year over the first two quarters of 2023.

Labor issues
While West Coast ports reached a tentative labor agreement earlier this year, Western Canada port workers went on strike in July. The strike heavily impacted the Port of Vancouver before a labor agreement was ratified after 13 days.

Economic influences
The U.S. unemployment rate rose to 3.8% in August, up from the 3.5% recorded in July. This brings the number of unemployed persons to 6.4 million. Preliminary August average hourly wages increased by 3.6% year-over-year, according to the BLS. The Federal Reserve raised interest rates to a 22-year-high range of 5.25 to 5.5% in July.

Product inventory levels remain low
The product inventory levels component of the Logistics Managers’ Index fell to 41.9 in July, its lowest value since February 2022. Smaller firms are reducing product inventories more than larger ones.

Q2 Cargo Container Volumes

• Six of the eight major U.S. ports tracked by CBRE—Los Angeles, New York & New Jersey, Savannah, Houston, Virginia and Charleston—had increased Q2 container volume compared with five years ago.
• Manzanillo, Mexico was the only major North American port with year-over-year growth in Q2 container volume (+7.2%). Compared with five years ago, volume at Manzanillo was up by 24% as it and fellow Mexico port Lazaro Cardenas benefit from nearshoring of manufacturing operations by many U.S. companies.
• Container volume is decreasing to normal pre-pandemic levels at most major ports after record highs last year caused by the need for more inventory to meet strong consumer demand.

Figure 1: Q2 TEU Volume Comparisons

Source: Various Port Authorities, CBRE Research, Q2 2023.

U.S. Seaport, Inland Port & Non-Port Market Fundamentals

• Industrial vacancy rates increased by 50 basis points (bps) quarter-over-quarter for seaport markets and by 40 bps for both inland port and non-port markets to 3.5%, 4.6% and 3.7%, respectively.
• Markets with the lowest vacancy rates were all seaports: Charleston (1.3%), Los Angeles (1.5%), Oakland (2.4%) and Portland (2.6%).
• Inland port markets had the most combined net absorption in Q2 totaling 60.4 million sq. ft., led by Dallas-Ft. Worth (18 million sq. ft.), Chicago (10.8 million sq. ft.) and Atlanta (6.6 million sq. ft.).

Source: CBRE Research, Q2 2023.

SPOTLIGHT: Port of Seattle

• The Northwest Seaport Alliance (NWSA) is a marine cargo operating partnership between the Port of Seattle and Port of Tacoma. The NWSA is a significant transport hub and the fourth-largest container entryway in North America. It includes 1,758 acres of land, 11 terminals, 57 cranes and a 50-foot-deep waterway.
• The NWSA supports 48,100 jobs and generates more than $4.3 billion in business revenues.
• Over the past two decades, the port invested more than $500 million to improve the safety, speed and reliability of major transportation corridors.
• The NWSA handled $70 billion of waterborne trade with 180 trading partners globally in 2022. Top trading partners include China, Japan, Republic of Korea and Taiwan.
• As of June 2023, the port recorded a 130% year-over-year increase in auto volume, largely due to General Motors and GLOVIS America’s consolidation of KIA and Hyundai.
• The Puget Sound region (Seattle, Tacoma, Bellevue and Everett) has the second-largest concentration of warehousing on the West Coast of North America. Approximately 9.6 million sq. ft. of new space was delivered in 2022.

History
The Port of Seattle was founded in 1911 by the state of Washington after competing railroad companies had first built a disordered stretch of railroad tracks, docks and warehouses along Elliott Bay. Today, the port is a gateway to Asia and handles more than 80% of imported and exported goods between the lower 48 states and Alaska.

Labor issues
While West Coast ports reached a tentative labor agreement earlier this year, Western Canada port workers went on strike in July. The strike heavily impacted the Port of Vancouver before a tentative labor agreement was reached within a few weeks.

Looking Ahead
The port plans to add 100,000 jobs over the next 25 years for a total workforce of 300,000. In addition to its own carbon-reduction initiatives, the port has joined the Northwest Ports Clean Air Strategy, which aims to phase out emissions from seaport-related activities by 2050.

North America Seaport Cargo Statistics, Q2 2023

Figure 2: TEU Container Activity, Q2 2023

Source: Various Port Authorities, CBRE Research, Q2 2023.

North America Seaport Cargo Statistics, January–June 2023

Figure 3: TEU Container Activity, January–June 2023

Source: Various Port Authorities, CBRE Research, Q2 2023.