Lawrence J. Gross

The news of late has featured a number of stories on port market share. Is the U.S. West Coast regaining all or some of the volume it lost during the 2014-15 longshore labor chaos? The West Coast’s share appeared to be weak in the first quarter, but the situation was a bit more confusing because last year’s numbers were distorted by the disruption. So how much can we tell from the monthly numbers? 

Setting aside the long-term trend, which clearly shows a West Coast to East Coast shift, I wanted to try to understand how valid recent data points are. To find out, I looked at port shares of containerized trade over the last 10 years using data from PIERS, a sister product of JOC.com within IHS.

I threw out 2015 data because of the slowdown and concentrated on 2005 through 2014. What I found was interesting. Early year data at Los Angeles-Long Beach, for instance, tend to show a problematic share trend. There may be an underlying issue, but the fact is that LA-LB’s share always declines in February and March.

To illustrate, look at this chart, which shows the average LA-LB share of U.S. import TEUs by month for the 12 months of the year over the 2005 to 2014 timeframe. Over those 10 years, the average share captured by the San Pedro Basin ports was 42.6 percent in January but only 40 percent in February. It drops further to 39 percent on average in March.

In fact, of all the major ports examined, LA-LB has the biggest seasonal share swing of all: 4.3 percent from the low point in March (39 percent) to the high point in October (43.6 percent). So it makes a huge difference what month you are looking at when talking about market share.

Looking at the other West Coast regions reveals the same basic pattern, but perhaps a bit less severe. Share declines in February and March and then recovers. But East and Gulf Coast ports show the opposite pattern. Share of imports peaks in February and March and then declines. Note that we are talking about share and not absolute volume. The fact that New York-New Jersey share peaks in March doesn’t mean March is the busiest month of the year, but rather that the port captures the biggest portion of whatever is moving that month.

One possible reason for this phenomenon is that beneficial cargo owners are less time-sensitive late in the first quarter because of normal seasonal patterns or the mix of freight moving at that time of year.

How does 2016 look? Through April, volumes into the West Coast are generally down for every month compared with the previous 10-year average. LA-LB has been the most severely affected. Volume in March was particularly bad, with share plunging more than 6 percent from January. April looked a bit better. Oakland and the Bay Area have fared better. In fact, January and April have seen better share trends than has previously been typical.

This analysis shows that comparing one month’s share to another can be misleading, and if you’re looking at any particular month’s results, you should look at the same month over previous years. Alternatively, you can use a 12-month rolling average, which will eliminate the seasonality problem but won’t reveal clearly any trends occurring in recent months