America's container ports play an important role in handling U.S. merchandise trade moving to and from distant places around the world. Each year, these seaports handle exports produced at U.S. factories and farms and imports of goods such as automobiles, machinery, electronics, apparel, shoes, toys, and food. American households depend on the nation's container seaports for everyday items, and American businesses depend on these seaports for facilitating the exchange of merchandise with trading partners around the world.

2008 was an exceptionally challenging year for the nation's container ports as TEU throughput dropped nationwide.

During 2008, the volume of maritime freight handled by America's container ports dropped. U.S. international merchandise trade transported by maritime container vessels fell sharply toward the end of the year, a decline that continued into 2009. Total U.S. containerized freight for December 2008 was down 18 percent compared with December 2007 (table 1). Maritime containerized imports declined 15 percent, and exports fell by 21 percent (JOC PIERS 2009a). This happened as U.S. businesses cut inventories, manufacturing and construction activities stalled, and Americans cut back on spending as unemployment rose, home values fell, and investment portfolios shrank.

The year 2008 was exceptionally challenging for the nation's leading container seaports. After a steady pace at the beginning of the year, by end of 2008, containerized freight throughput declined for each of the leading ports in the Pacific/west coast, Atlantic/east coast, and gulf coast regions (table 1). All the major ports saw a decline in December 2008 compared with the same month in the previous year. The nation's two leading container ports, Los Angeles and Long Beach, experienced 13 and 25 percent year-on-year drops, respectively. Other leading ports saw worse declines in container traffic, with cargo falling by more than one-third to almost one-half-for example, Seattle fell 38 percent and Mobile fell 49 percent.

By the end of 2008, U.S. total maritime container traffic at all U.S. ports was estimated at 28.2 million TEUs (see box), a 3 percent drop from the 29 million TEUs in 2007 (table 1). During 2008, west coast ports had a 5 percent decline in container traffic and gulf coast ports had a 3 percent decline. East coast ports had a 0.2 percent, or essentially negligible, increase. Among the nation's top 10 leading container ports, 7 saw declines in their container cargo throughput in 2008. The two largest declines were Seattle at 16 percent and Long Beach at 8 percent (table 1 and figure 1). Only 3 of the top 10 ports, all on the east coast, handled slightly more container cargo in 2008 than in 2007-Savannah grew by 3.6 percent, New York/New Jersey by 1.4 percent, and Norfolk by 1.2 percent. These east coast ports tend to have a more diversified trade market with Europe, Asia, Latin America, and South America, unlike the west coast ports, which trade almost exclusively with the Asia-Pacific market.

TEU Defined:

The standard measure for counting containers is the 20-foot equivalent unit, or TEU. This measure is used to count containers of various lengths. A standard 40-foot container is 2 TEUs, and a 48-foot container equals 2.4 TEUs. It is also used to describe the capacities of containerships or ports.

Containerized trade between the United States and the rest of the world fell in 2008 because of the combined influence of weak domestic consumer demand, which cut import levels, and the global economic slowdown, which cut foreign demand for U.S. exports. During the second half of 2008, as the U.S. financial crisis began to directly impact consumer spending, Americans cut back on their purchase of imported clothes, automobiles, and other consumer merchandise, such as toys and flat-panel televisions. In addition, as the domestic financial crisis deepened and the global recession widened, overseas trading partners' demand for U.S. goods started to tumble, further weakening the maritime container market. As a result, declines occurred in U.S. demand for maritime container transportation by ocean vessels, cargo-handling activity at the container ports, and the volume of intermodal freight moved to and from the ports by truck and rail.

The declines in maritime container traffic mirrored the slide in overall U.S. international merchandise exports and imports transported by all modes of transportation in 2007 and 2008 and followed the trend in the national economy as a whole (figure 2 and figure 3). According to the U.S. Department of Commerce, the primary contributors to the declines in merchandise exports and imports in the fourth quarter of 2008 were industrial supplies and materials; automotive vehicles, parts, and engines; consumer goods; and foods, feeds, and beverages (USDOC CB BEA 2009). When adjusted for inflation, the value of merchandise exports in the fourth quarter of 2008 dropped 34 percent compared with that of the third quarter. The value of merchandise imports dropped 19 percent (figure 3).

Trends in container shipping are directly related to patterns in overall international trade, which is a primary contributing factor in the nation's economic growth. For example, real gross domestic product (GDP)-the output of goods and services produced by labor and property located in the United States-decreased at an annual rate of 6 percent in the fourth quarter of 2008 (i.e., from the third quarter to the fourth quarter). In the third quarter, real GDP decreased 0.5 percent (USDOC BEA 2009). The slowdown in real GDP primarily refl ected a sharp decline in personal consumption expenditure, the downturn in exports and imports, and a decline in state and local government spending.

Declines in economic activity and drops in exports and imports result in reduced demand for freight transportation services by all modes of transportation. However, because the majority of U.S. overseas merchandise trade (over 66 percent by value and 99 percent by weight) moves by ocean vessel (USDOC CB 2009), the nation's container ports felt the crunch immediately, but the effects were not limited to the seaports.1

1 As used here, overseas trade excludes U.S. merchandise trade with Canada and Mexico.