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July 3, 2023

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14 Journal of Commerce | J uly 3, 2023 www.joc.com Cover Story SSA's DeNike expressed concern that the large volumes of discre- tionary cargo retailers have diverted to East and Gulf coast ports this past year will not return quickly enough or at a magnitude necessary to cover the increased labor costs in the new contract. "This contract that we just agreed to yesterday is going to increase that cost," DeNike said. Further placing the West Coast's cargo at risk is the growing diversion of production from China to Southeast Asia and the Indian Subcontinent, where cargo typi- cally moves to the US via the Suez Canal, rather than landing on the West Coast. For now, however, mainland China, including Hong Kong, still dominates the sourcing landscape, supplying 40.7% of US imports last year, down from 42.4% in 2021, according to data from PIERS. Georgia's numbers reflect this trend, Lynch said, noting that the per- centage of imports through Savannah that originated in China dropped to 41% in 2022 from 49% in 2018, boost- ing India's share to 6.3% from 5.4% and Vietnam's share to 9.8% from 3.7% during the same period. US East and Gulf coast ports can enjoy the geographical advantage of the sourcing shift to India and Vietnam. That's particularly true for India, which Lynch notes is attract- ing more manufacturing as port and inland logistics infrastructure improves. The share of US imports from India inched up to 3.9% last year from 3.8% in 2021, driven by increases in apparel and iron and steel components, according to PIERS. "Combine a five-day ocean tran- sit [compared to a West Coast rout- ing] with all the land-side advan- tages we have in the East Coast and Gulf, and I think there's a case made that the West Coast has got some serious concerns, because we're going to continue to grow if this shift happens," Lynch told a roomful of shippers at the Georgia Foreign Trade Conference June 12. JOC email: bill.mongelluzzo@spglobal.com twitter: @billmongelluzzo email: peter.tirschwell@spglobal.com twitter: @petertirschwell executives rarely discuss. "Many companies in the US are looking to reduce ... the amount of imports they have ... coming from China." Griff Lynch, executive director of the Georgia Ports Authority, said the key question for port executives on the East and Gulf coasts is not, "'How much of your cargo is going back to the West Coast?' The right question is, 'Why did the East Coast and the Gulf gain market share, and is it sustainable?'" market to 44% from 29% in the same period, according to PIERS, a sister product of the Journal of Com- merce within S&P Global. But even with labor peace restored and ports operating normally again, port and carrier officials say some of that cargo may not return to the West Coast this time around. The increased reach of East and Gulf coast ports into the Midwest, such as Virginia and Savannah push- ing cargo to Chicago and Memphis, respectively, and a shift in sourcing away from China have made Suez Canal routings more appealing. "We are seeing a deleveraging of trade between the US and China," Jeremy Nixon, CEO of Ocean Net- work Express, told the Capital Link Singapore Maritime Forum in late April, touching on a topic carrier Port of Long Beach "You have a sinking feeling that you screwed up. When both sides feel that way, it's actually good."

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