Scale is based solely off weekly metrics to give more granularity on high frequency data indications; see Appendix for scale that combines weekly and monthly metrics
Source: Goldman Sachs Global Investment Research
Our weekly bottleneck scale rose back to a '2' this week following last week's tick down to '1'; this week, the absolute level of our congestion index ticked up ~9% w/w (Exhibit 1). The number of container ships waiting to dock and unload goods along the West Coast remained at zero for the 22nd consecutive week, but East Coast backlogs increased from 4 to 7 (note that we slightly overweight ship backlogs when calculating the index; Exhibit 6). West Coast intermodal rail performance was mixed on the back of decelerating BNSF intermodal traffic (-20% YoY) and higher BNSF dwell (13.6 hours versus 7.3 hours last week), though UNP traffic was better (-3.6% YoY versus -8.0% last week) as dwell went slightly lower (12.2 hours versus 14.3 hours last week). Overall, chassis dwell time at the ports did tick up ~6% w/w, partly contributing to this week's scale ticking back up to '2'; ocean container rates also rose from ~$1k per forty foot equivalent unit to ~$1.7k, further contributing to the scale uptick.
While this week's tick back up to '2' is disappointing, it somewhat reflects weekly bottleneck volatility; we still think we can exit April with a combined bottleneck scale implying supply chains in line with levels seen prior to March 2020 (give or take a few percentage points).
GS Weekly Bottleneck Index, Feb 2020 - Apr 2023
GS Weekly Congestion Scale, Scored by Month*
Source: Goldman Sachs Global Investment Research
Source: Goldman Sachs Global Investment Research
As a reminder (and to help reiterate why and how we construct the index), please refer to the Appendix following Exhibit 17. Additionally, for further clarity on tracked congestion metrics, please refer to the glossary following Exhibit 19.
The key question remains focused on whether the last stumbling blocks around congestion ease in the US - notably the still-full warehouses, as well as the East Coast port backlogs. Should this continue to mitigate, then it is conceivable we could sustain the index being back to a '1' over 1H23. As suspected could happen when we first introduced the index, labor and equipment availability is improving alongside demand moderation, both helping the fall in the index.
With the dramatic easing that already took place in 2022, we think from a transport subsector perspective – we would look to the US Rails (NSC, UNP, CSX) and intermodal marketing companies (SNDR, JBHT) as being the prime beneficiaries should congestion stay easier, as these networks have generally been amongst the most adversely impacted by supply-chain problems – both from operational constraints and underperformance on volumes due to an inability to translate high consumer demand into actual throughput. The truckload sector, on the other hand, has benefited significantly from elevated spot rates due to constraints on truck capacity. Should the labor and equipment shortages see further relief due to moderating congestion, this could open the pressure relief valve as presumably additional effective truck capacity would be created through more normalized goods flow.
Source: Goldman Sachs Global Investment Research
