For container lines and ports, what a difference a year makes
A year ago, maritime operators were laying up ships and canceling sailings. By the close of 2020, ship lines were awash with freight, swamping U.S. ports. What’s next?
Gary Frantz is a contributing editor for DC Velocity and its sister publication, Supply Chain Xchange. He is a veteran communications executive with more than 30 years of experience in the transportation and logistics industries. He's served as communications director and strategic media relations counselor for companies including XPO Logistics, Con-way, Menlo Logistics, GT Nexus, Circle International Group, and Consolidated Freightways. Gary is currently principal of GNF Communications LLC, a consultancy providing freelance writing, editorial and media strategy services. He's a proud graduate of the Journalism program at California State University–Chico.
A year ago, as ship lines entered 2020, they were laying up vessels and canceling sailings in response to soft volumes, while also facing the looming impact of new emissions standards that mandated use of ultra-low-sulfur fuels or equipping ships with exhaust-cleaning systems.
Then the pandemic arrived. Volumes in an already tepid market fell off the deep end. Ship lines parked more vessels. Ports cut operations, sent employees home to work, and took other measures to adapt.
“When production [from Asia] slowed and ship lines canceled sailings, we saw double-digit drops in cargo” from the spring a year ago, recalls Beth Rooney, deputy port director for the Port Authority of New York & New Jersey.
Then just as quickly as volumes disappeared, they returned—with a vengeance.
“As we ended July in negative numbers, and turned the page to August, we went from a double-digit decline to a double-digit increase,” with strong volumes continuing through November, Rooney noted. That reflected shippers who were responding not only to the pandemic’s initial impact but also to concerns over a second wave. “In anticipation of another shutdown, they are throwing as much cargo into the supply chain as they can, creating a ‘just-in-case’ supply chain,” whereas before, the industry convention was to embrace just-in-time practices, which limited on-hand inventories. “The port as a community has had to adjust very quickly.”
“THE WEIRDEST ECONOMY” IN MEMORY
The initial pandemic-driven surge turned out to be the opening act in a historic uptick in ocean cargoes, catapulting 2020 into, in the words of one port official, “the weirdest economy” in memory. What was normally a spring and summer peak season was supercharged by pandemic-related consumer buying of goods of all types, as well as a crush of orders for personal protective equipment and related health-care supplies. Add to that massive inventory rebuilding by supply chain managers who shifted from just-in-time to just-in-case tactics. And then the traditional holiday shipping surge joined the party.
By November and December, demand, particularly in the all-important Asia-Pacific–to–North America trades, was off the charts. Containership lines pivoted and put every vessel they could muster on the water.
The flood of ocean cargo isn’t expected to ease soon. The consensus among industry executives is that the surge in cargo and the dearth of container capacity will continue well into 2021. And as the U.S. copes with a renewed surge in Covid cases, just-in-case supply chain stocking is expected to keep trucks and warehouses full into the spring.
All this has meant historic records—and unprecedented challenges—for many U.S. ports. In October, the Port of Long Beach handled over 806,000 containers, an all-time monthly record, says Mario Cordero, the port’s executive director. “That’s the first time we reached that milestone in our 100-year history,” he notes. “Add to that what L.A. [the Port of Los Angeles] moved and you’re talking about 1.7 million containers” moving through the Greater San Pedro Basin complex. “That’s more containers than most of our major gateways in the U.S. move in a year,” he says.
And the beat played on. November’s volume of 783,523 TEUs (20-foot equivalent units) at Long Beach was a record for that month. In early December, the San Pedro Bay resembled a giant containership parking lot, with some 20 vessels at anchor waiting for a berth.
While the record volumes certainly presented—and continue to present—challenges, Cordero cites several complete or near-complete infrastructure projects that helped ease the congestion. One was the new $1.5 billion Gerald Desmond Bridge, which opened in the fall of 2020 and has three traffic lanes and an emergency lane in each direction (versus two on the old bridge). Some 65,000 vehicles a day cross the bridge, whose raised height also permits larger ships to enter the port’s back channel.
He also cites Phase 3 of Long Beach’s Middle Harbor redevelopment project. Construction on the port’s new marine terminal is scheduled to finish this March, but two-thirds of the complex is already in operation. When finished, the state-of-the-art terminal will be able to process as many as 3.5 million containers annually. “That terminal alone would be No. 6 in terms of [capacity of] U.S. gateway terminals,” Cordero notes.
GOING OUT OF THE BOX
Ports also are taking an out-of-the-box approach to some of the challenges. At the Port of New York & New Jersey, terminal operators have coordinated to extend hours of operation and add Saturday service, notes deputy port director Rooney. And its Class 1 rail providers, Norfolk Southern and CSX, “have been tremendous partners,” she says, noting that they’ve added more trains to the system.
The port also has reached out across the region to help shippers secure more storage capacity. An initial list published in July identified 65 off-port sites with open areas where containers could be parked. Rooney’s staff updated that list in November. “Of the 65 entities that had space [in July], today, there are only three who have space available. That is remarkable,” Rooney notes. And with airline traffic curtailed by the pandemic, the staff has even considered making unused long-term parking space at the Newark (New Jersey) airport available for container storage.
Given the lack of sufficient off-port storage options and warehouses already stuffed to the gills, shippers have been holding containers longer and using them as temporary storage, Rooney reports. “Shippers are parking containers,” she says. “Containers and chassis that are normally on the street for three or four days now are out twice that long. That impacts capacity.”
She is encouraging shippers to be more mindful of the problem—and to be part of the solution. “We understand there is limited warehouse capacity, but keeping those containers on the wheels prevents other containers from moving out of the terminals,” she explains. “If the terminals get backed up to the point where they can’t take any more, then the ships start to line up outside.
“We are imploring shippers that if you have to store your cargo in containers, at least get them off the wheels,” so the chassis can be returned and redeployed, Rooney adds.
WHAT TRADE WAR?
For ocean carriers and port operators alike, 2020 proved to be a year of reckoning—but not for any of the expected reasons. “No one is talking about fuel or trade wars anymore,” says Jim Newsome, president and CEO of the South Carolina Ports Authority (SCPA), who noted that he was pessimistic going into his fiscal year starting in July. Covid changed all that, he says. “Americans spend a percentage of their income, and when they can’t spend it on movie tickets, ball games, travel, or going out to dinner, they buy other things” like home-improvement items, computers and furniture for home offices, home fitness equipment, and other “around the house” items. “It’s been a defined shift in purchasing of goods related to the home. That has really driven the spike in volumes.”
Bryan Brandes, the Port of Oakland’s maritime director, shares a similar sentiment. “We call it retail therapy,” he says. “With people working from home, there’s been a huge demand for supplies for home-improvement projects.” He notes as well that low interest rates have spurred home buying, adding to the demand for construction materials and manufactured goods for the home, from appliances to furniture to housewares.
The shift in purchasing practices, particularly as more consumers than ever have flocked to e-commerce, has placed a premium on warehouse space, adds Newsome. In response to the rising demand, the SCPA recently broke ground on a new 3 million-square-foot distribution center for Walmart at a port-owned site in Dorchester County.
OCEAN CAPACITY: FROM GLUT TO CRUNCH
For containership lines, the bust then boom of 2020 saw the industry navigate new and unfamiliar market conditions as well. Who would have predicted a year ago, that 2020, despite the pandemic, would turn out to be one of the most profitable years in the industry’s history?
“If you look at January of last year, market conditions were weak,” says Lars Jensen, chief executive of Denmark-based SeaIntelligence Consulting. “Demand growth was at zero percent. Carriers were on their heels,” Jensen says, adding that still today “you have an extremely low order book for new vessels.”
On top of that, a 20-year consolidation push had finally reached its endgame, with carriers embracing capacity discipline and increasingly using canceled sailings to control capacity and maintain rates.
“Then you have the pandemic. That accelerated blank [canceled] sailings. They [containership operators] were extremely good at doing that. They removed capacity within a week of the market collapsing,” Jensen notes.
As the rebound gathered pace, carriers, at first hesitant, began releasing more capacity into the market. With surging demand outstripping supply, “by November everything that could sail was sailing,” and with that, “schedule reliability plummeted to lows we’ve never seen before,” he notes. “All the BCOs [beneficial cargo owners] are screaming bloody murder,” says Jensen. He has spoken to numerous large forwarders and BCOs. Their common take on the market situation: “Now it’s a matter of how much of my contract [capacity commitment] I can move and how much more I’ll have to pay to move the rest.”
“ROLLED” CONTAINERS ROIL SUPPLY CHAINS
One illustration of the service challenges presented by surging ocean cargo volumes has been the increasing number of “rolled” containers, meaning containers that were bumped from the vessel they were originally scheduled to be loaded on. According to an analysis by Ocean Insights, a Germany-based ocean supply chain visibility and market intelligence firm, overall container rollover ratios—which it defines as the percentage of cargo arriving at a port for trans-shipment on a different vessel than planned—rose to 28.5% at leading trans-shipment ports in November, up from 22.2% in October.
“Container lines are trying their best to cope with critical box shortages in Asia, but this is putting more pressure on operations and freight rates,” observes Josh Brazil, Ocean Insights’ chief operating officer. “I think what we are seeing is that the cargo pipeline has maxed out ocean supply chain capacity and this is being reflected in heightened rollover levels, which translates into more disruption for shippers and forwarders.”
Carriers’ efforts to normalize operations have met with mixed success. According to Ocean Insights data, the rollover ratio for Maersk, the world’s largest containership line, increased to 35.1% in October from 32.9% in September. Hapag-Lloyd’s ratio jumped to 37.7% for the same month from 34.2% a month earlier. And shipping line ONE (Ocean Network Express) saw its percentage of rolled containers creep up to 39.3% in October from 38.9% the prior month. Bucking this trend, CMA CGM’s rollover ratio dropped from 40.6% and 45.8%, respectively, in September and August, to 31.4% in October.
LINER PROFITS SURGE
Operating challenges aside, ship owners seem reasonably upbeat about their prospects for the near term. In a November interview with Bloomberg TV, Maersk CEO Søren Skou commented that “global supply chains had quite a lot of bottlenecks and they have driven up prices,” as shippers dealt with a whiplash effect of the steep second-quarter decline in cargo, followed by the sharp rebound. The result, Skou said, has been freight costs remaining unseasonably high, particularly in the trans-Pacific lanes. His comments to Bloomberg came shortly after the Copenhagen, Denmark-based company increased its profit forecast for 2020. “We basically have booked all the orders for the rest of the year [2020], and that’s why we are confident raising our guidance,” he told Bloomberg.
At container line Hapag-Lloyd, volumes at the close of 2020 had mostly recovered from the pandemic-induced slowdowns recorded earlier in the year, noted Uffe Ostergaard, who is the company’s president for the North America region. By the third quarter, “global transport volume was still around 3% below where it had been [in 2019, but] it was still a lot better than we expected it to be earlier [in 2020],” he says.
As cargo volume has accelerated, “we have added all the available capacity, both in terms of ships and containers,” he says. “We are focusing on contractual commitments in addition to optimizing vessel capacity and reducing container turn times wherever possible.” He notes as well that through early December, the company had continued to see “a surge in volume … and we don’t think there will be any significant changes until the Chinese New Year in mid-February.”
Warehouse automation orders declined by 3% in 2024, according to a February report from market research firm Interact Analysis. The company said the decline was due to economic, political, and market-specific challenges, including persistently high interest rates in many regions and the residual effects of an oversupply of warehouses built during the Covid-19 pandemic.
The research also found that increasing competition from Chinese vendors is expected to drive down prices and slow revenue growth over the report’s forecast period to 2030.
Global macro-economic factors such as high interest rates, political uncertainty around elections, and the Chinese real estate crisis have “significantly impacted sales cycles, slowing the pace of orders,” according to the report.
Despite the decline, analysts said growth is expected to pick up from 2025, which they said they anticipate will mark a year of slow recovery for the sector. Pre-pandemic growth levels are expected to return in 2026, with long-term expansion projected at a compound annual growth rate (CAGR) of 8% between 2024 and 2030.
The analysis also found two market segments that are bucking the trend: durable manufacturing and food & beverage industries continued to spend on automation during the downturn. Warehouse automation revenues in food & beverage, in particular, were bolstered by cold-chain automation, as well as by large-scale projects from consumer-packaged goods (CPG) manufacturers. The sectors registered the highest growth in warehouse automation revenues between 2022 and 2024, with increases of 11% (durable manufacturing) and 10% (food & beverage), according to the research.
The Swedish supply chain software company Kodiak Hub is expanding into the U.S. market, backed by a $6 million venture capital boost for its supplier relationship management (SRM) platform.
The Stockholm-based company says its move could help U.S. companies build resilient, sustainable supply chains amid growing pressure from regulatory changes, emerging tariffs, and increasing demands for supply chain transparency.
According to the company, its platform gives procurement teams a 360-degree view of supplier risk, resiliency, and performance, helping them to make smarter decisions faster. Kodiak Hub says its artificial intelligence (AI) based tech has helped users to reduce supplier onboarding times by 80%, improve supplier engagement by 90%, achieve 7-10% cost savings on total spend, and save approximately 10 hours per week by automating certain SRM tasks.
The Swedish venture capital firm Oxx had a similar message when it announced in November that it would back Kodiak Hub with new funding. Oxx says that Kodiak Hub is a better tool for chief procurement officers (CPOs) and strategic sourcing managers than existing software platforms like Excel sheets, enterprise resource planning (ERP) systems, or Procure-to-Pay suites.
“As demand for transparency and fair-trade practices grows, organizations must strengthen their supply chains to protect their reputation, profitability, and long-term trust,” Malin Schmidt, founder & CEO of Kodiak Hub, said in a release. “By embedding AI-driven insights directly into procurement workflows, our platform helps procurement teams anticipate these risks and unlock major opportunities for growth.”
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”