Logistics Index Shows Lunar New Year Volumes Hitting West Coast
The ITS Logistics February Index indicates that post-Lunar New Year shipping volumes are beginning to arrive at West Coast ports. While January imports declined year-over-year, they remained above historical averages. The report also noted that East and Gulf Coast ports have been gaining market share from their West Coast counterparts.
- Transpacific spot rates have fallen sharply ahead of the post-holiday period; Drewry’s World Container Index for the Shanghai to Los Angeles route dropped to $2,239 per 40-foot container, a year-over-year decline of 53%. Some freight forwarders report that actual rates paid are near the $1,450-$1,500 range, which is considered the breakeven point for many ocean carriers. - The market share shift to East and Gulf Coast ports is influenced by the recent conclusion of their labor negotiations, which resulted in a tentative six-year agreement. The new contract is notably more restrictive on automation compared to the West Coast's labor agreement, which was settled in mid-2023. - Global shipping routes remain constrained by issues at critical chokepoints. The Panama Canal continues to operate below its full capacity of 36 daily transits due to persistent drought conditions, handling roughly 33 ships per day. Meanwhile, carriers are only beginning a tentative, partial return to the Suez Canal after a two-year avoidance, as security risks in the Red Sea have not been fully eliminated. - In response to weak pre-holiday demand, ocean carriers have announced 57 blank (canceled) sailings on transpacific routes over a two-week period to manage excess capacity. This aggressive capacity management follows a muted pre-Lunar New Year peak, which analysts suggest may indicate a shift toward a later restocking cycle rather than a collapse in demand. - The January 2026 ISM Manufacturing PMI registered 52.6%, indicating a return to expansion for the sector after a period of contraction. The New Orders Index also expanded for the first time since August 2025, suggesting a potential increase in future manufacturing activity and import demand. - Lingering uncertainty over U.S. tariff policy continues to influence manufacturing strategy, with many companies now planning for tariffs to remain in place for the next decade. This is a key driver behind the trend of reshoring and investing in domestic production to mitigate supply chain risks.
