From April 1st to June 1st, the city of Shanghai was subjected to a strict lockdown policy that generated notable disruptions to the global supply chain. Shanghai is home to China’s busiest container seaport, responsible for 27% of all maritime exports from China to the US, and although the port has continued operating, it has been running at severely reduced capacity since the new lockdowns began (1). According to the New York FED, the event contributed to logistic backlogs that caused the Global Supply Chain Pressure Index (GSCPI, shown in Figure 1) to rebound after four months of continuous declines.
Given the global supply chain impacts from these lockdowns, many U.S. companies find themselves asking, are the lockdowns having notable impacts on domestic port/freight activity? To help answer this question from one of many perspectives, below we look at (i) import data (ii) Loadsmart truckload activity around major port areas (2).
(1) According to Datamyne-Descartes data for the full year of 2021.
(2) Besides Shanghai, other minor Chinese ports have also been affected by lockdowns.
For the U.S. market, the average number of shipments with imports arriving from China declined around 12% since the lockdown began – Figure 2. But this drop was not expected to affect all port activity equally. As we can see in Table 1, the ports of Los Angeles-Long Beach (LA/LB) receive 45% of all imports from Shanghai to the U.S. – and 44% of all imports from China. The next closest port, in terms of share of Shanghai imports, is Newark with only 11%. Also, the LA/LB ports also experienced the greatest decline in the volume of imports arriving from Shanghai in the recent weeks as seen in Figure 3.
Indeed, it does seem that import flows into LA/LB have softened more than other major ports, which is likely due to the lockdown-related disruption. Our next step was to understand how the decline in LA/LB imports may have affected the domestic truckload market in this region.
Loadsmart Truckload Data
To understand if this fall in imports connected to Shanghai affected the domestic truckload market in SoCal, we assessed a basic hypothesis: if the Shanghai import declines into LA/LB were significant, then it should have triggered a downward pressure on carrier rates during this period. To investigate this, we measured the average carrier rate per mile paid on outbound volumes from locations within a 100-mile-radius from these ports.
The hypothesis would suggest that rates from the regions surrounding LA/LB ports should have declined far more than their peers’ rates. Instead, we observed that OB LA/LB full truckload rates were stable, oscillating within a $1 dollar-range since mid-April and actually even increased overall as seen in Figure 4.
In conclusion, although we see that the decline in LA/LB imports likely stemmed from the Shanghai lockdowns, we have not seen a direct softening in truckload data that can be connected to it just yet. Even though the city lifted its two-month long lockdown a few days ago, Loadsmart will continue to monitor port activity connected to it as the effect on the global chain is expected to last for a few more months.
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