January 23, 2024 MWCRE Market Pulse

• Houthi rebels fired a missile at the U.S.-owned ship Gibraltar Eagle near Yemen in the Gulf of Aden, following a prior anti-ship missile attack on a U.S. destroyer in the Red Sea. The Houthis claimed responsibility for the attack, escalating tensions in the Red Sea affecting global shipping and the vital energy and cargo corridor linking Asia, the Middle East, and Europe.
• Approximately 30% of worldwide container traffic and over 1 million barrels of crude oil per day typically pass through the Suez Canal, as reported by a global freight booking platform.
• ​Jason Miller, a professor of supply-chain management at MSU, did some back-of-the-napkin calculations, stating: “The increases in container shipping prices brought on by the Red Sea crisis aren’t poised to significantly affect inflation felt by American consumers. Therefore, be cautious of any headlines that suggest otherwise.”

Southern California Ports Reclaim Market Share 

• Southern California ports, specifically, Los Angeles and Long Beach, are experiencing a resurgence in U.S. import activity. The improved performance is attributed to better labor relations with dockworkers, a result of resolved contract talks last year, making Southern California ports more attractive to importers.
• In September, October, and November, the ports in Southern California registered year-over-year growth in containerized imports ranging from 17% to 31%, as per port data. Meanwhile, imports declined at East Coast gateways like Georgia’s Port of Savannah and the Port of New York and New Jersey during the same period.
• Disturbances at the Panama Canal and the Suez Canal, both serving East Coast and Gulf Coast ports, have prompted importers to redirect their goods through California to circumvent extended transit times and increased costs.
• Importers favor the West Coast as the primary entry point for toys, clothes, furniture, and televisions from Asian factories due to its efficient ocean route from factory to port. The West Coast’s extensive network of warehouses, trucks, and rail operations facilitates the widespread distribution of goods across the country.
• The existing agreement between East and Gulf Coast ports and the International Longshoremen’s Association expires in September of 2024. Inside Logistics reports that the ILA has instructed its members to ready themselves for a 2024 Strike. affirming their commitment to the set date and ruling out any extension of the current contract beyond that.