Global Trade Intelligence and Global Trade Analytics are Top Technologies Expected to Deliver Business Value
Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, released findings from its study What Companies are Doing to Tackle Escalating Global Supply Chain Challenges. The study shows that 74% of the supply chain and logistics leaders surveyed view technology as fundamental or highly important to their organization’s growth strategy in the face of rising global trade challenges, such as tariffs and trade barriers, supply chain disruptions and geopolitical instability. This number jumps to 88% for companies expecting greater than 15% growth over the next two years. In addition, 59% consider technology as extremely or very important to provide a competitive advantage in international trade.
When considering what technology capabilities are expected to help companies involved in international trade enable business growth and gain a competitive advantage, 36% cited global trade intelligence as the top capability required to deliver the greatest value in the next two years. This was followed by global trade analytics at 27% and by supply chain mapping at 26% (see Figure 1).
Figure 1: Top capabilities required to deliver the greatest business value in the next 2 years
Source: Descartes/SAPIO
Results also showed that respondents across all industries agreed that global trade intelligence was the top technology capability expected to deliver the greatest value over the next two years, including, for example, in manufacturing (40%), wholesale and distribution (44%), finance and insurance (38%), and retail (30%) sectors.
“For companies in diverse industries, global trade has become much more complex, with many new challenges to traditional business operations,” said Jackson Wood, Director, Industry Strategy at Descartes. “As businesses contend with tariffs and trade barriers, geopolitical instability, supply chain disruptions and compliance requirements, technology tools can help them build greater agility and resilience into their supply chains to compete more effectively.”
Descartes and SAPIO Research surveyed 978 supply chain intelligence leaders in key trading nations across Europe, North and South America, and Asia-Pacific. The goal was to understand the strategies, tactics and technologies used by companies involved in international trade to help gain a competitive advantage and ensure continued business growth, and to identify if these varied by factors such as country, industry, company size and business growth. Respondents are members of company leadership teams, from management level to Chief Executive Officer or Owner.
In December 2024, U.S. container import volumes wrapped up the year with a solid 2,367,271 twenty-foot equivalent units (TEU), just shy of the 2.4 million TEU threshold that has typically strained port capacity. This result continues a trend of higher year-on-year volumes throughout 2024. With a slight 0.1% dip from November’s 2,368,758 TEUs, December volumes mark the third time in history when imports for the month have exceeded 2.3 million TEUs. It also marks the second-highest December volume ever, trailing only the 2,389,060 TEUs recorded in December 2021. Overall, total container imports for 2024 (28,196,462 TEUs) increased 13% over 2023 (24,957,640 TEUs).
Imports from China saw a 1.7% increase to 902,519 TEUs, following two months of volume declines. Despite an 11.8% drop from the record high of 1,022,913 TEUs in July 2024, December’s figures were still 14.5% higher than the same month in 2023, highlighting the continued strength of U.S.–China trade. The upcoming Chinese Lunar New Year in late January, however, may slow trade volumes in early 2025 as trade operations in China are affected.
Descartes’ January logistics update emphasizes the strength of U.S. container imports throughout 2024, despite potential challenges ahead. In 2025, U.S. importers face risks on several fronts, including the looming threat of tariff changes under the incoming Trump administration later this month, which could significantly impact global trade. Additionally, ongoing negotiations between USMX and ILA, the Chinese Lunar New Year, and geopolitical instability in the Middle East may create potential supply chain volatility in the early months of the new year.
In this Article…
U.S. container imports reached 2,367,271 TEUs in December 2024.
2024 U.S. container imports surpass 2023 by 13%.
December 2024 imports decreased by just 0.1% over November and were 12.4% higher than December 2023.
December imports from China were up 1.7% from November and up 14.5% over December 2023.
For the seventh month in a row, the top West Coast ports captured more share than the top East and Gulf Coast ports.
Port transit delays largely improved across East and Gulf Coast ports in December while delays at West Coast ports were mixed.
The potential for incoming tariff changes threaten to disrupt U.S. trade relations.
USMX and the ILA will continue negotiations through January 15, 2025, which could impact operations at South Atlantic and Gulf Coast ports and affect U.S. supply chains.
Ongoing Houthi attacks and the Israel-Hamas conflict continue to force shipping route diversions from the Red Sea to the Cape of Good Hope.
Key points to monitor to manage supply chain risks.
Recommendations to help mitigate global shipping challenges.
Strong December 2024 U.S. container import volumes bring exceptional year to a close.
Despite a slight 0.1% decline from November, U.S. container import volumes in December 2024 reached 2,367,271 TEUs, performing exceptionally well compared to previous years. Just under the 2.4 million TEU threshold—a level that previously contributed to port congestion and delays during the pandemic—December 2024 marked the second-highest volume ever recorded for the month, trailing only December 2021 (2,389,060 TEUs) by 0.9% or 21,789 TEUs (see Figure 1). Compared to December 2020, the third-highest volume on record, December 2024 imports edged higher by 0.4% or 9,049 TEUs.
The full-year performance for U.S. container imports in 2024 demonstrates continued strength. Total imports were 28,196,462 TEUs, reflecting a 13% increase over 2023’s total of 24,957,640 TEUs. This year also marks the third-highest annual volume on record, just 0.3% behind 2022 (28,276,129 TEUs) and 3% behind 2021 (29,082,573 TEUs), underscoring the resilience and growth of U.S. trade despite global challenges.
Figure 1: U.S. Container Import Volume Year-over-Year Comparison
Source: Descartes Datamyne™
Compared to December 2023, December 2024 volumes were up by 12.4% and a remarkable 24.3% from pre-pandemic December 2019. With 2018 as the exception due to tariffs taking effect in 2019, the month-over-month change between November and December has varied historically from slight declines to low growth, with fluctuations driven by seasonal factors and market conditions related to the timing of the holiday season. December 2024 import volume maintained this pattern with a marginal 0.1% decrease over November (see Figure 2).
Figure 2: November to December U.S. Container Import Volume Comparison
Source: Descartes Datamyne™
In December 2024, container import volumes at the top 10 U.S. ports declined by 28,530 TEUs, a small 1.4% decrease compared to November 2024 (see Figure 3). The Port of Los Angeles reported the largest volume increase (up 29,261 TEUs) followed by Oakland (up 4,353 TEUs) and Baltimore (up 3,551 TEUs). The Port of New York/New Jersey recorded the largest decrease in import volume (down 31,400 TEUs), followed by Long Beach (down 25,206 TEUs) and Houston (down 7,066 TEUs). At 476,217 TEUs, the Port of Los Angeles showed its highest December volume in the previous six years.
Figure 3: November 2024 to December 2024 Comparison of Import Volumes at Top 10 U.S. Ports
Source: Descartes Datamyne™
In December 2024, U.S. import volume from China increased by 1.7% over November to 902,519 TEUs and was 11.8% lower than the peak in July 2024 (1,022,913 TEUs) (see Figure 4). Year-over-year, December imports from China increased 14.5%, reflecting the overall upward trend in 2024. Additionally, total volumes in 2024 were up 15% over 2023. The top three commodity categories (HS-2 codes) for December 2024 were HS-94 (Furniture, Bedding, etc.), HS-39 (Plastics and Articles Thereof) and HS-84 (Nuclear Reactors, Boilers, Machinery, etc.). In 2024, each of these three commodities experienced positive year-on-year growth: 3.6%, 12.9%, and 21.4% respectively. China accounted for 38.2% of total U.S. container imports in December, a 0.7% increase from November and 3.3% below the February 2022 peak of 41.5%.
Figure 4: December 2023–December 2024 Comparison of U.S. Total and Chinese TEU Container Volume Relative to Chinese Import Record
Source: Descartes Datamyne™
In December 2024, U.S. container import volume from the top 10 countries of origin (CoO) increased by 4,488 TEUs, representing a 0.3% increase from November (see Figure 5). Among these countries, China (up 14,738 TEUs), Taiwan (up 5,652 TEUs), and South Korea (up 4,750 TEUs) experienced the largest volume increases. In contrast, India (down 11,359 TEUs), Hong Kong (down 4,798 TEUs), and Japan (down 4,685 TEUs) recorded the most significant volume decreases.
Figure 5: November 2024 to December 2024 Comparison of U.S. Import Volumes from Top 10 Countries of Origin
Source: Descartes Datamyne™
West Coast ports maintain dominance in U.S. container import volumes.
For the seventh consecutive month, the top five West Coast ports continued to capture a larger share of U.S. container import volumes compared to their East and Gulf Coast counterparts. December data highlights a widening gap, with the East and Gulf Coast’s share dropping from 38.9% to 37.1%, while the West Coast’s share saw a slight decrease from 45.0% in November to 44.9% in December. Overall, the dominance of the top 10 ports weakened in December, reaching its lowest level of 2024, with their combined share falling to 82.0% from 83.8% in November (see Figure 6).
Figure 6: Volume Analysis for Top Ports, West Coast Ports and East and Gulf Coast Ports
Source: Descartes Datamyne™
U.S. port transit delays improve overall.
Overall, transit delays have decreased across the top 10 U.S. ports, with notable improvements on the East Coast. On the West Coast, Tacoma and Long Beach experienced the most significant increases, with delays rising by 2.4 days and 0.8 days, respectively. Other West Coast ports showed improved transit times, with the largest reductions in delays seen at the Port of Los Angeles, which improved by 1.6 days, and Seattle, which saw a 1.4-day decrease. Despite some regional fluctuations, delays across the top U.S. ports generally trended positively in December.
Figure 7: Monthly Average Transit Delays (in days) for the Top 10 Ports (Oct. 2024 – Dec. 2024)
Source: Descartes Datamyne™
Note: Descartes’ definition of port transit delay is the difference as measured in days between the Estimated Arrival Date, which is initially declared on the bill of lading, and the date when Descartes receives the CBP-processed bill of lading data.
Gulf Coast imports drop significantly in December 2024.
December Gulf Coast imports (215,069 TEUs) fell by 17.8% from November (261,523 TEUs), the largest month-over-month decline in 2024 and the third-lowest volume after April (214,245 TEUs) and July (211,961 TEUs) (see Figure 8). This sharp decline in volumes may be an anticipatory market response to the looming ILA strike. With the lower volumes, port transit times at Gulf Coast ports improved significantly in December, with overall delays decreasing by approximately 70 days from approximately 228 days in November.
Figure 8: January 2023 to December 2024 U.S. Gulf Coast Container Imports
Source: Descartes Datamyne™
Tariff changes threaten to increase the complexity of global trade.
With the incoming Trump administration signaling intentions to implement broader and deeper tariffs on a range of commodities, emphasizing imports from China, Mexico and Canada at this juncture, there is heightened uncertainty surrounding the global trade environment. While it is possible that, in the coming months, some U.S. importers may pull shipments forward in anticipation of tariff changes, U.S. container import volumes currently show no definitive response from the market through December.
Escalating Houthi attacks continue to disrupt trade across the Red Sea.
Houthi rebels intensified their attacks on vessels in the Red Sea throughout December, including strikes targeting U.S. cargo ships and warships. The U.S. Navy has been actively defending against these assaults, but the ongoing attacks have significantly disrupted shipping and slowed trade in the region. These disruptions are also contributing to rising global shipping costs. If the Middle East continues to destabilize, global trade conditions are likely to become even more volatile, further straining international supply chains.
USMX and ILA resume contract negotiations ahead of January 15 deadline.
The United States Maritime Alliance (USMX) and the International Longshoremen’s Association (ILA) resumed contract negotiations on January 7, 2025, following a tentative agreement in October to extend the bargaining period until January 15. While negotiations paused in November due to a standstill, both parties are now returning to the table with less than two weeks to reach a deal. In the meantime, volumes at East Coast and Gulf Coast ports are declining as importers are potentially exploring other options in anticipation of potential disruptions. If the ILA and USMX are unable to reach an agreement by January 15, supply chain disruptions at these critical ports may follow.
Managing supply chain risk: what to watch in 2025.
U.S. container import volume was just shy of the 2.4 million TEU mark in December 2024, decreasing only 0.1% from November volumes. The economy continues to exceed expectations, however, the anticipation of incoming tariffs, approaching deadline for the ILA/USMX agreement, and the ongoing conflict in the Middle East may create challenges for global supply chains. Here’s what Descartes will be watching in 2025:
Monthly TEU volumes between 2.4M and 2.6M. This level will continue to stress ports and inland logistics until infrastructure improvements are made. December 2024 imports fell just shy of the 2.4M level; however, elevated volumes do not appear to be putting undo pressure on U.S. ports.
Port transit wait times. If they decrease, it’s an indication of improved global supply chain efficiencies or that the demand for goods and logistics services is declining. December 2024 transit delays improved among East and Gulf Coast ports while West Coast ports saw mixed increases and decreases.
Expanded tariffs and other potential ‘protectionist’ trade policies. Depending on the short- to medium-term priorities of the incoming Trump administration, concerns about broader and deeper tariffs applied to a wide array of goods could compel U.S. importers to significantly re-engineer their supply chains, putting additional pressure on global logistics infrastructure. The impact of potential tariffs on recent monthly U.S. container imports appears to be minimal currently, as volumes have proven strong throughout 2024, and port transit time delays have remained relatively stable.
The economy. The U.S. is an import-driven economy, so economic health is an important indicator of container import volumes. Following the November Federal Open Market Committee (FOMC) meeting, the Federal Reserve borrowing rate was lowered 25 basis points to 4.25% while reported inflation was 2.7%. According to the Bureau of Labor Statistics November employment report, the unemployment rate remained mostly unchanged at 4.2% while employers added 227,000 jobs.The next FOMC meetingis scheduled for January 26-27.
Middle East conflict. Houthi attacks are continuing to influence carriers to forego the Suez Canal, extending transit times around the Cape of Good Hope. The impact of diversions away from the conflict is still minimal on volumes or transit delays for East and Gulf Coast ports.
ILA/USMX contract negotiation. Negotiations resumed January 7th. With the January 15, 2025, deadline approaching, it will be important to monitor this situation until a final contract is ratified.
Consider recommendations to help minimize global shipping challenges.
U.S. container import volumes in December continued to demonstrate the robust performance seen throughout 2024. Although imports for the month fell shy of the 2.4 million TEU threshold, they still performed exceptionally compared to previous years, exceeded only by December 2021. Meanwhile, ILA/USMX contract negotiations have resumed, with the expiry of their temporary agreement nearing. Adding to the uncertainty, the ongoing conflict in the Middle East is exerting increasing pressure on global supply chains.Further complicating the trade landscape, the potential introduction of new tariffs by the incoming Trump administration could significantly impact global trade flows and force supply chain re-engineering. Descartes will continue to monitor and share key insights using Descartes Datamyne, along with U.S. government and industry data, to provide valuable perspectives on global shipping trends in the months ahead.
Short-term:
Monitor port volumes and delays to assess trade disruptions as imports remain between the 2.4M and 2.6M levels that have historically stressed U.S. maritime logistics infrastructure.
Consider modelling the impacts of increased tariffs on imported goods, and whether a change in sourcing strategy could mitigate potentially higher costs.
Track the Middle East conflict as carriers divert shipping around Africa, impacting shipping capacity and timeliness.
Evaluate the impact of inflation and the Russia/Ukraine and Israel/Hamas conflicts on logistics costs and capacity constraints. Ensure that key trading partners are not on sanctions lists.
Near-term:
For companies that have cargo moving through the Suez Canal, evaluate the impact of extended rerouting caused by Middle East conflicts.
Long-term:
Evaluate supplier and factory location density to mitigate reliance on over-taxed trade lanes and regions of the globe that have the potential for conflict. Density creates economy of scale but also risk, and subsequent logistics capacity crisis highlights the downside. Conflicts do not happen “overnight” so now is the time to address this potentially business disrupting issue.
Descartes Systems Group, the global leader in uniting logistics-intensive businesses in commerce, released its December Global Shipping Report for logistics and supply chain professionals. In November 2024, U.S. container import volume decreased 5% from October 2024, which is consistent with seasonal month-over-month declines seen in previous years, though smaller than the 9% decrease over the same period in 2023. Imports from China also declined, though November volumes are 13.3% higher than the same month in 2023, underscoring the continued strength of U.S.–China trade. The December update of the logistics metrics monitored by Descartes continues to demonstrate the strong performance of container imports in 2024; however, the potential introduction of new tariffs by the incoming Trump administration, stalled ILA/USMX contract negotiations, and the ongoing conflict in the Middle East may put pressure on global supply chains throughout the balance of the year.
At 2,368,758 twenty-foot equivalent units (TEU), November U.S. container import volume dipped for the first time in four months below 2.4 million TEUs—a level that previously led to port congestion and delays during the pandemic (see Figure 1). Versus November 2023, volume in November 2024 was higher by 12.8%, and up a significant 24.6% from pre-pandemic November 2019. Notably, total imports for the first 11 months (25,829,192 TEUs) of 2024 have already surpassed the 12-month total (24,957,640 TEUs) for 2023—by 871,552 TEUs or 3.5%.
Figure 1. U.S. Container Import Volume Year-over-Year Comparison
Source: Descartes Datamyne™
“November has traditionally been a softer month than October; however, compared to the past six years, this year’s month-over-month decline is the smallest by volume (down 125,877 TEUs) (see Figure 2),” said Jackson Wood, Director, Industry Strategy at Descartes. “While front-loading shipments due to heightened uncertainty around labor unrest and tariffs is a possibility, U.S. container import volumes have been exceptionally strong over peak season this year and, overall, robust throughout 2024.”
Figure 2: October to November U.S. Container Import Volume Comparison
The December report is Descartes’ fortieth installment since beginning its analysis in August 2021. To read past reports, learn more about the key economic and logistics factors driving global shipping, and review strategies to help address it in the near-, short- and long-term, visit Descartes’ Global Shipping Resource Center.
For four consecutive months, U.S. container imports have surpassed 2.4 million twenty-foot equivalent units (TEU)—a threshold that has historically strained U.S. maritime logistics. In October 2024, U.S. container imports totaled 2,494,635 TEUs, a slight 1% decline from September’s 2,520,935 TEUs and just 2.4% lower than this year’s high of 2,556,180 TEUs in July.
In October, U.S. container imports from China reached 960,016 TEUs, marking the fifth month in 2024 where import volumes from the country exceeded 900,000 TEUs. This trend underscores the strength of U.S.-China trade in 2024, especially compared to 2023 when monthly imports never surpassed the 900,000 TEU mark. Since reaching a record high of 1,022,913 TEUs in July 2024, imports from China declined by 6.1% in October, yet they remain 8.3% higher than in the same month last year.
The November update from Descartes on logistics metrics underscores the continued strength of container imports in 2024. However, U.S. importers may face ongoing challenges as USMX/ILA contract negotiations continue, port delays worsen, and the ongoing conflict in the Middle East contributes to global supply chain disruptions. These factors are expected to fuel supply chain volatility throughout the remainder of the year.
In this Article…
U.S. container imports reached 2,494,635 TEUs in October 2024.
Imports from China were 960,016 TEUs in October, down 3.0% from September and down 6.1% from July’s record high of 1,022,913 TEUs.
October 2024 imports decreased by 1.0% over September and increased by 8.1% compared to October 2023.
For the fourth month in a row, the top West Coast ports captured more share than the top East and Gulf Coast ports.
With a fourth consecutive month of elevated import volumes, port transit delays increased at the majority of the top 10 U.S. ports in October.
USMX and the ILA will continue negotiations through January 15, 2025, which could impact operations at South Atlantic and Gulf Coast ports and affect U.S. supply chains.
Ongoing Houthi attacks and the Israel-Hamas conflict continue to force shipping route diversions from the Red Sea to the Cape of Good Hope.
Key points to monitor in 2024 to manage supply chain risks.
Recommendations to help mitigate global shipping challenges.
U.S. container imports remain elevated, though diverge slightly from traditional seasonal increase.
October imports reached 2,494,635 TEUs, marking the fourth consecutive month in 2024 with container volumes exceeding 2.4 million TEUs—a level that led to port congestion and delays during the pandemic (see Figure 1). Versus October 2023, TEU volume was higher by 8.1% and up a significant 20.5% over pre-pandemic 2019. For the first 10 months of 2024, import volumes have grown by 13.1% over the same period in 2023 and by 16.9% over the same period in pre-pandemic 2019. By contrast, import volumes for the first 10 months of 2023 grew by just 3.4% over pre-pandemic 2019, underscoring again the impressive performance of container imports in 2024.
Figure 1: U.S. Container Import Volume Year-over-Year Comparison
Source: Descartes Datamyne™
In the previous six years, import volume increased from September to October, due in part to October being one day longer and having no major holidays. October 2024 volumes, however, reversed this trend, albeit with a modest 1% drop over September. While October volumes remain elevated, this slight decrease could stem from contingency planning for labor unrest at East and Gulf Coast ports and more front-loading of volumes by U.S. importers from August through September (see Figure 2).
Figure 2: September to October U.S. Container Import Volume Comparison
Source: Descartes Datamyne™
In October 2024, container import volumes at the top 10 U.S. ports declined by 25,112 TEUs, a 1.2% decrease compared to September 2024 (see Figure 3). The ports of Long Beach (up 30,222 TEUs), Houston (up 7,327 TEUs), and Tacoma (up 2,925 TEUs) saw the largest gains. In contrast, the ports of Los Angeles (down 39,062 TEUs), Norfolk (down 14,963 TEUs), and Charleston (down 8,791 TEUs) experienced the most significant month-over-month declines.
Figure 3: September 2024 to October 2024 Comparison of Import Volumes at Top 10 U.S. Ports
Source: Descartes Datamyne™
In October 2024, U.S. import volume from China reached 960,016 TEUs, a 3.0% decline (28,534 TEUs) from September and 6.1% lower than the peak in July 2024 (1,022,913 TEUs) (see Figure 4). Year-over-year, October imports from China increased 8.3%, reflecting the overall upward trend in 2024. The top two commodity categories (HS-2 codes) for October 2024 remained consumer goods: HS-94 (Furniture, Bedding, etc.) and HS-95 (Toys, Games, and Sports Equipment, etc.). China accounted for 38.5% of total U.S. container imports in October, a 0.7% decrease from September and 3.0% below the February 2022 peak of 41.5%.
Figure 4: October 2023–October 2024 Comparison of U.S. Total and Chinese TEU Container Volume Relative to Chinese Import Record
Source: Descartes Datamyne™
In October 2024, U.S. container import volume from the top 10 countries of origin (CoO) fell by 36,450 TEUs, representing a 2% decline from September (see Figure 5). Among these countries, Japan (up 11,841 TEUs) and India (up 5,141 TEUs) experienced the largest volume increases. In contrast, China (down 29,409 TEUs), South Korea (down 7,807 TEUs), and Taiwan (down 7,443 TEUs) recorded the most significant volume decreases.
Figure 5: September 2024 to October 2024 Comparison of U.S. Import Volumes from Top 10 Countries of Origin
Source: Descartes Datamyne™
West Coast ports maintain lead in import share for fifth consecutive month.
For the fifth consecutive month, the top five West Coast ports continued to capture a larger share of container import volumes compared to their East and Gulf Coast counterparts. October data reveals only slight shifts in distribution: the West Coast’s share edged up from 45.7% in September to 45.8% in October, while the East and Gulf Coast ports’ share dipped slightly from 39.6% to 39.4%. Overall, the dominance of the top 10 ports remained steady, with their combined share of total container imports slipping only marginally from 85.3% in September to 85.2% in October (see Figure 6).
Figure 6: Volume Analysis for Top Ports, West Coast Ports and East and Gulf Coast Ports
Source: Descartes Datamyne™
October sees increased transit delays at majority of top 10 U.S. ports.
As a potential result of the brief ILA strike at the beginning of the month, East and Gulf Coast port delays extended while, overall, delays worsened for seven of the top 10 U.S. ports. Transit delays at the West Coast ports of Long Beach, Oakland, and Tacoma saw marginal improvements. The East Coast’s Port of Savannah saw the largest rise, with transit times increasing by 1.5 days—from 7.5 days in September to 9.0 days in October. Meanwhile, the Port of Tacoma showed the most improvement, reducing delays by 0.4 days, bringing transit times down from 7.5 days in September to 7.1 days in October.
Figure 7: Monthly Average Transit Delays (in days) for the Top 10 Ports (Aug. 2024 – Oct. 2024)
Source: Descartes Datamyne™
Note: Descartes’ definition of port transit delay is the difference as measured in days between the Estimated Arrival Date, which is initially declared on the bill of lading, and the date when Descartes receives the CBP-processed bill of lading data.
Houthis committed to continuing Red Sea blockade.
On news that Israeli shipping companies are selling assets to other companies, Yemen Houthis reinforced their commitment to maintaining their Red Sea blockade. With shipping attacks and threats, the conflict in the Middle East continues to divert carriers away from the Suez Canal to the Cape of Good Hope, raising carrier costs. Shipping concerns will likely increase if the Middle East is further destabilized.
Gulf Coast imports rise in October 2024.
Gulf Coast imports grew for the third month in a row, increasing by 1.9% in October (230,832 TEUs) over September (226,458 TEUs) (see Figure 8). Port transit times at Gulf Coast ports worsened in October, with delays increasing by 13% overall.
Figure 8: November 2023 to October 2024 U.S. Gulf Coast Container Imports
Source: Descartes Datamyne™
United States Maritime Alliance (USMX) and International Longshoremen’s Association (ILA) temporarily extend bargaining period to January 15, 2025.
On October 1, nearly 50,000 members of the ILA went on strike across South Atlantic and Gulf Coast ports. On October 4, a tentative agreement was reached to extend the collective bargaining period until January 15, 2025; subsequently, ILA workers returned to work on October 4. On October 25, USMX and ILA announced in a joint statement that they will resume contract discussions in November on outstanding issues. Likely a result of the short labor disruption, October’s data shows longer port transit delays at East and Gulf Coast ports compared to September, and that the top five West Coast ports gained a marginal increase in volume share over the top five East and Gulf Coast ports.
Managing supply chain risk: what to watch in 2024.
U.S. container import volume remained above the 2.4 million TEU mark in October 2024 while decreasing slightly from September volumes. The economy continues to exceed expectations, however, a fourth month of elevated container import volumes combined with increasing port delays and the ongoing conflict in the Middle East may create challenges for global supply chains. Here’s what Descartes will be watching for the remainder of 2024:
Monthly TEU volumes between 2.4M and 2.6M. This level will continue to stress ports and inland logistics until infrastructure improvements are made. Withfour consecutive months of elevated volumes, ports may be beginning to show signs of stress.
Port transit wait times. If they decrease, it’s an indication of improved global supply chain efficiencies or that the demand for goods and logistics services is declining. October 2024 transit delays increased at the majority of top 10 U.S. ports largely due to elevated import volumes over the past four months. The most significant increases were seen at East Coast ports.
Expanded tariffs and other potential ‘protectionist’ trade policies*. Depending on the short- to medium-term political priorities of the incoming Trump administration, there may be broader and deeper tariffs applied to a wide array of goods imported by the U.S. This could compel U.S. importers to significantly re-engineer their supply chains, putting additional pressure on global logistics infrastructure.
The economy. The U.S. is an import-driven economy, so economic health is an important indicator of container import volumes. Following the September Federal Open Market Committee (FOMC) meeting, the Federal Reserve borrowing rate was lowered 50 basis points to 5.1% while reported inflation was 2.5%. According to the Bureau of Labor Statistics August employment report, the unemployment rate remained mostly unchanged at 4.2% while employers added 142,000 jobs.The next FOMC meetingis scheduled for November 6-7.
Middle East conflict. Houthi attacks are continuing to influence carriers to forego the Suez Canal, extending transit times around the Cape of Good Hope. The impact of diversions away from the conflict is still minimal on volumes or transit delays for East and Gulf Coast ports.
ILA/USMX contract negotiation. While job action has been halted at East and Gulf Coast ports, negotiations are ongoing, so it will be important to monitor these actions until a final contract is ratified.
*New with this month’s report.
Consider recommendations to help minimize global shipping challenges.
October U.S. container imports volumes reflect the continued robust performance seen throughout 2024. With a fourth consecutive month of elevated volumes, port transit delay times increased at the majority of top 10 U.S. ports compared to September. ILA/USMX negotiations remain ongoing until a final contract is reached, which is targeted for January 15, 2025. The ongoing conflict in the Middle East is creating pressure on global supply chains that could cause disruptions throughout the remainder of 2024. Descartes will continue to highlight key Descartes Datamyne, U.S. government and industry data in the coming months to provide insight into global shipping.
Short-term:
Monitor port volumes and delays to assess trade disruptions as imports remain between the 2.4M and 2.6M levels that have historically stressed U.S. maritime logistics infrastructure.
Track the Middle East conflict as carriers divert shipping around Africa, impacting shipping capacity and timeliness.
Evaluate the impact of inflation and the Russia/Ukraine and Israel/Hamas conflicts on logistics costs and capacity constraints. Ensure that key trading partners are not on sanctions lists.
Consider modelling the impacts of increased tariffs on imported goods, and whether a change in sourcing strategy could mitigate potentially higher costs.
Near-term:
For companies that have cargo moving through the Suez Canal, evaluate the impact of extended rerouting caused by Middle East conflicts.
Long-term:
Evaluate supplier and factory location density to mitigate reliance on over-taxed trade lanes and regions of the globe that have the potential for conflict. Density creates economy of scale but also risk, and subsequent logistics capacity crisis highlights the downside. Conflicts do not happen “overnight” so now is the time to address this potentially business disrupting issue.
Over the past year, global trade has faced seismic disruptions, from escalating geopolitical conflicts and persistent inflation to supply chain breakdowns and expanding regulations. With fines for non-compliance reaching into the millions and CBP enforcements increasing in severity, organizations can no longer afford—from a financial, reputation and sustainability perspective—to view compliance as anything less than a strategic priority.
Take, for instance, CBP’s enforcement of the Uyghur Forced Labor Prevention Act (UFLPA), established to root out forced labor from the supply chain. CBP requires importers to prove that their goods are free from forced labor before releasing them. For companies lacking full visibility across their supply chain—including sourcing information from Tier 1 and Tier 2 suppliers and their suppliers—this CBP enforcement tactic can be extremely costly. And without key stakeholders within the organization working together to build a holistic compliance strategy, importers are facing an uphill battle.
Navigating murky waters
As enforcement becomes harsher and penalties more severe, ensuring compliance with trade regulations is also becoming trickier for importers. Government stakeholders and policymakers today are significantly less prescriptive in how they identify third parties that are illegal or ill-advised to do business with—and this creates a serious visibility problem for companies.
The U.S. government, for example, publishes a list of Chinese entities involved with forced labor in the Uyghur region but admits the list is not exhaustive. As a result, organizations must conduct their own due diligence to prove to CBP that their goods comply with UFLPA regulations. The bottom line is that simply screening third parties against published government lists is no longer adequate.
A collaborative model
As policymakers become markedly less prescriptive, organizations are shackled with the internal operational burden of managing increasingly complex due diligence requirements. Indeed, the rising pressure to mitigate “three-dimensional” risk—regulatory, reputational, and resiliency (e.g., is this supplier facing political instability or climate change challenges that might impact their ability to be a long-term partner?)—is driving a new paradigm of trade compliance that promotes collaboration and the dismantling of departmental silos to build a cohesive risk mitigation strategy.
Due diligence is no longer solely the domain of the compliance group within an organization. Moving forward, companies will need to think collectively and holistically about compliance, working collaboratively across multiple operational areas—legal, procurement, trade compliance, finance, information technology, logistics and supply chain, etc.—to address three-dimensional risk.
Building the collaborative framework
How does an organization facilitate internal collaboration to build a compliance program that mitigates regulatory, reputational, and resiliency risk? The first step is to identify the individuals and stakeholder groups within the organization that have the capacity, capabilities, and necessary perspectives to make a meaningful contribution to the compliance discussion.
Executive sponsorship is vital for establishing a common language, lens, and framework to help break down discipline silos and facilitate productive collaboration. By appointing an executive leader, such as the Chief Ethics Officer or Chief Compliance Officer, to chair the internal governance conversations and take ownership of cross-functional collaboration efforts, organizations can build a holistic compliance program capable of meeting complex regulatory demands and reducing compliance risk.
In addition to aligned internal governance, exploring relationships with established third party partners (e.g., freight forwarders, customs brokers, any intermediaries that help enable the supply chain) and technology providers (e.g., contract management, enterprise resource planning, compliance management providers) can yield unexplored collaborative opportunities to address compliance challenges.
Compliance in the spotlight
Adopting a collaborative approach to trade compliance helps organizations stay ahead of the game, gaining a competitive advantage as the trend towards supply chain transparency intensifies and environment, social, and corporate governance (ESG) becomes a valuable competitive differentiator.
Notably, the U.S. Securities and Exchange Commission (SEC) has made significant motions towards codifying sustainability directives, with its Climate and ESG Task Force already levying numerous enforcement actions for ESG-related misconduct. In parallel, the European Commission issued the Corporate Sustainability Reporting Directive (CSRD) and recently adopted the European Sustainability Reporting Standards (ESRS), impacting many U.S.-based companies.
ESRS puts companies under the regulatory microscope, requiring annual disclosure of the impact of companies’ activities on people and the environment, including details of what the organization is doing to address issues like human trafficking, forced labor, and sustainability. For the first wave of organizations affected, sustainability reports will be required as soon as fiscal year 2024.
Taking the proactive path
With the blurring of regulatory and reputational risk, forward-thinking companies are getting out in front of the transparency and sustainability movement—before disclosure becomes a legal requirement. Organizations are driving a stake in the ground, both internally and externally, with statements from executive and governance leaders that clearly demonstrate a commitment to rooting out any forced labor risk and establishing a transparent and sustainable supply chain.
Whether this commitment takes the form of featuring compliance outcomes in the annual report or making compliance a reported business metric, for example, companies are being proactive in pledging to set specific goals and to be transparent with consumers and internal staff about the work they’re doing and the resources they’re allocating to effect change.
A collaborative compliance framework enables an organization to provide supply chain information that investors, the public, and regulatory bodies demand. For instance, did the strategic sourcing group change its standard operating procedures to bring a heightened level of due diligence into sourcing activities? What changes did the logistics and supply chain group implement with respect to how the organization thinks about moving goods from point A to point B? Did the legal and regulatory affairs group change the way it works with stakeholders internally to start bringing more transparency and accountability to the global supply chain?
It is in every organization’s best interest to embrace this paradigm shift in trade compliance and start building the cultural change towards transparency within the organization. By adopting a collaborative approach to trade compliance now, companies will be prepared when the law compels them to disclose their compliance policies and actions.
Creating value moving forward
With a sustainable commitment at the governance level to transparency and internal cooperation, plus the appropriate level of executive sponsorship, organizations can foster productive collaboration between stakeholders and hold people accountable to executing the agreed upon course of action. This framework is the key to pivoting trade compliance from what has been historically viewed as a cost center to a strategic value creator within the organization. As trade compliance is redefined across the globe, savvy organizations can reap the rewards of enhanced internal and external visibility, while mitigating regulatory, reputational, and resiliency risk moving forward.
Organizations across all industries—from automotive, consumer goods, and pharmaceuticals to transportation, electronics, and oil and gas—have felt the disruptive effect of the coronavirus pandemic. Turning the global supply chain on its head, COVID-19’s impact has cut across multiple facets of international trade, including manufacturing, import/export, logistics, compliance, and supply chain management. This disruption has been a wake-up call for organizations worldwide, prompting them to assess their readiness to respond reliably, expediently, and effectively to rapidly evolving risk factors going forward.
Disruption Is Inevitable
Whether driven by an unprecedented pandemic or events that are more familiar, like trade wars or frequent duty and tariff changes, future disruptions to the flow of goods are unavoidable and companies must be as prepared as possible. Case in point: on June 29, the amendments to the Export Administration Regulations (EAR) published by the U.S. Department of Commerce, Bureau of Industry and Security (BIS) came into force, impacting U.S. companies that export goods, software, and technology to China, Russia, and Venezuela.
A few days later on July 1, a new free trade agreement entered into force as the United States-Mexico-Canada Agreement (USMCA) replaced the North American Free Trade Agreement (NAFTA). While the USMCA is designed to provide “significant improvements and modernized approaches to rules of origin, agricultural market access, intellectual property, digital trade, financial services, labor, and numerous other sectors,” companies must respond efficiently to changes in import duties, tariffs, and rules of origin verification procedures in order to avoid compliance issues.
The current government’s uncertain trade relations with China, BREXIT’s unfolding impact on U.K. trade, and evolving pandemic predictions are just a handful of factors that may unsettle global supply chains going forward. With disruption an unavoidable consequence of doing business in 2020, successful companies are securing their supply chains by prioritizing operational responsiveness, agility, and adaptability in order to keep goods flowing while avoiding compliance violations and penalties.
Are You Prepared?
Today’s businesses are keenly aware of the importance of keeping a close eye on their sources of raw materials, parts, and finished products to ensure logistics costs do not erode overall profit margins. But COVID-19 caught many companies off guard, throwing their sourcing strategies and revenue flow into crisis.
Descartes’ 2020 Global HTS Classification Benchmark Survey of importers, shippers, logistics and supply chain operators, and customs brokers around the globe analyzed the impact of the supply chain disruption on companies’ operations and ascertained how they are addressing issues for the long-term.
The survey found that 35% of respondents were forced to research alternative suppliers or locations as a result of the pandemic. An additional one-third felt increased pressure to identify ways to reduce duty and tariff costs in order to shore up the shrinking bottom line.
Lessons Learned: Count On Technology
For those survey respondents forced to look for alternative suppliers due to COVID-19, many also looked to advanced technology solutions to address the more demanding workload and support the shift to a distributed workforce and the ‘remote working’ model.
In their leaning towards more advanced technology, approximately three-quarters of respondents were aiming to establish a workflow process for mass classification and to create an audit trail for proof of due diligence; sixty-eight percent were seeking a collaborative online classification process, while 55% sought configurable classification rule sets for different industries and product categories.
The Descartes survey also found that the majority of companies—not just those impacted by COVID-19—are adopting more advanced technology to enhance responsiveness to change and to increase resiliency. Regardless of the number of SKUs classified annually, businesses are recognizing the value of additional layers of protection against the unknown to help ensure their import operations remain viable during turbulent times.
Keep Agility and Responsiveness Top of Mind
Prior to switching to av more automated and integrated research and classification solution, most respondents surveyed were using labor-intensive and error-prone manual methods; a massive 81% were accessing multiple government websites to access classification data and 46% were looking up information in hardcopy books—an unacceptable drain on valuable time and resources and a serious impediment to pivoting swiftly in the face of disruption.
Respondents using advanced global trade intelligence solutions, with up-to-date tariff data accessed from a single system, reportedly accelerated the classification process by 30% to 100%. This increase in speed is a critical piece of the preparedness strategy, as companies aim to focus on agility to keep goods moving during market volatility.
Future-proof Your Organization
New disruptions to the global supply chain may be just around the corner. A proactive global trade intelligence strategy will help organizations continue to drive commerce while ensuring trade compliance in the face of inevitable change:
1. Take advantage of more advanced technologies to maintain compliance efficiency and accuracy as workload demands increase, as well as to better manage a more distributed workforce.
2. Look to technology solutions to increase the resilience and responsiveness of trade compliance programs.
3. Ensure a single point of access to research complex international trade information, including up-to-date HTS codes, duties and tariff treatments, rulings, and explanatory notes.
4. Use a robust solution to effectively exercise and establish a “standard of reasonable care” for product classification.
With the impact of COVID-19 on sanctions and export controls still not fully known, compliance professionals should re-evaluate their global trade compliance strategy, honing it to boost adaptability, agility, and responsiveness to change. By leveraging advanced global trade intelligence technologies, companies can better insulate themselves from the fallout of future supply chain disruptions while minimizing duty spend and achieving higher trade compliance rates in the process. For compliance professionals everywhere, the age-old Boy Scout adage rings true: Be prepared.