Jul 13

US imports forecast to rise slightly in second half

JOC.com

Laden U.S. containerized imports should slightly rise over the second half of 2016 compared with the same period in 2015 as retailers’ stocking for the back-to-school season provides a short-lived bump to container volumes before dipping and then building again in the late fall for the holiday shopping season, according to the monthly Global Port Tracker.

Inbound laden container traffic will increase by 0.5 percent year-over-year during the next six months, reflecting a return to normal trends after the 2014 and 2015 West Coast port crisis shook up normal import flows. The Global Port Tracker, which is compiled for the National Retail Federation by Hackett Associates, expects imports to rise 1.4 percent year-over-year this month before declining in August and September by 2 percent and 2.6 percent, respectively.

“Trade is holding on to a small margin of growth, but this growth comes in the face of some adverse statistics as well as positive ones,” Hackett said. “The good news is that retail sales have remained positive as the consumer continues to cautiously spend. The hope is that this spending will continue.”

The Global Port Tracker said laden import container volumes on a year-over-year basis will increase 4.4 percent in October and 2.8 percent in November. Imports of loaded containers grew 1.1 percent year-over-year in May. The May figure was up 12.8 percent from the prior month, the report said.

Year-over-year comparisons are difficult, however, because numbers in the first half of 2015 were affected by the slowdown at West Coast ports, as some container shipments were delayed before volumes increased once the slowdown ended, the NRF said.

In 2016, Global Port Tracker has been noticeably less bullish in its import projections than Mario Moreno, IHS Markit chief economist, who forecasts U.S. containerized imports this year will rise 5.7 percent, to 20.9 million TEUs, while exports will increase 1.3 percent, to 11.6 million TEUs. Indeed, the Port of Long Beach on Tuesday released actual laden import numbers for June, and the second-largest U.S. port reported an increase of 5.5 percent from June 2015.

The Pacific Maritime Association, which tracks all West Coast ports, reported that in the first five months of 2016, laden import container volume increased 2.8 percent compared with the same period in 2015. Global Port Tracker has total U.S. containerized imports increasing 1.5 percent compared with the first five months of 2015. This could indicate that West Coast ports this year are attracting back market share they lost last year to East Coast ports.

Laden import TEUs through West Coast ports increased by 2 percent in May, compared with the same month in 2015, to 939,858 TEUs, according to PIERS, a sister product of JOC.com within IHS Markit. The volume of laden container imports through East Coast ports fell by 2 percent to 755,404 TEUs and laden import traffic at Gulf ports fell by 13 percent year-over-year to 100,023 TEUs.

Contact Hugh R. Morley at Hugh.Morley@ihs.com and follow him on Twitter: @HughRMorley_JOC.

Jul 11

Seesawing spot rates a fact of life on the trans-Pacific

JOC.com

Spot rates in the eastbound trans-Pacific this week retreated modestly from the previous week, repeating an all-too-familiar trend in recent years of a general rate increase one week followed by rate deterioration in subsequent weeks.

The spot rate for shipping a 40-foot-equivalent unit from Shanghai to the East Coast was $1,727 per FEU, down 3 percent from last week, according to the Shanghai Containerized Freight Index, which is published on the JOC.com Market Data Hub. The rate last week had increased 19 percent from the previous week to $1,785.

The spot rate this week to the West Coast was $1,166 per FEU, down 4 percent from $1,209 last week. The rate last week to the West Coast had jumped 61 percent from the previous week because of a July 1 rate increase that a number of carriers had announced.

This up-and-down trend in the spot market rates has been a fact of life in the largest U.S. trade lane, and other east-west trades, since at least 2014. Due to global overcapacity, carriers have been unable to consistently maintain GRIs. Therefore, about once each month they announce large GRIs of $600 to $1,000 per FEU, although the rates they actually charge are usually half of the amount that was announced. Then the rates deteriorate in subsequent weeks until a new GRI is announced.

Recently, for example, carriers recorded a modest rate hike in early June to $1,685 per FEU to the East Coast. The spot rate then declined 2 percent, 7 percent and 2 percent in subsequent weeks before jumping higher with the July 1 GRI. The spot rate to the West Coast increased in early June to $852 per FEU, then declined 5 percent, 5 percent and 2 percent in subsequent weeks before spiking 61 percent to $1,209 with the July 1 GRI.

If there is any consolation for carriers, they should be able to keep the spot rate above $1,000 per FEU to the West Coast as the peak shipping season approaches. Industry analysts expect the trend in spot rates in late summer and fall to be upward, possibly spiking as high as $2,000 to the West Coast when capacity tightens in the busiest months this fall.

The story is much the same on the Asia-Europe trade lanes. Spot rates this week to North Europe gave back half of last week’s gains, and the spot rate to Southern Europe gave back 22 percent from the previous week, according to the SCFI.

This summer will mark a gradual upsizing of vessels in all-water services from Asia to the East Coast following the much-anticipated opening in late June of the third set of locks on the Panama Canal. The enlarged canal will initially be transited by vessels with capacities of up to about 10,000 twenty-foot-equivalent units, or twice the maximum size capable of transiting the older locks.

Carrier alliances announced that six services with vessels of 6,000 TEUs to 10,000 TEUs of capacity will be phased into the Panama Canal route this summer, according to industry analyst Alphaliner. However, since the services with Panamax vessels that had been transiting the older locks will be phased out, the net capacity increase on the all-water services will be marginal.

East Coast ports must still complete certain dredging and bridge-heightening projects over the next year or so before they are capable of deploying vessels of up to 13,000-TEU capacity via the Panama Canal. Also, they must address the congestion problems and logistical complexities of handling much large cargo surges from the bigger ships.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihs.com and follow him on Twitter: @billmongelluzzo

Jun 22

Peak Season Surcharge Postponement Update 6-22-16

| Jun 21, 2016 2:21PM EDT  joc.com

In an exercise that is likely to be repeated in the weeks ahead by other container lines, CMA CGM notified its customers that a previously announced peak-season surcharge in the eastbound trans-Pacific that was scheduled to take effect on July 1 has been postponed until July 15.

The customer advisory listed the proposed peak-season surcharges as $360 per 20-foot-equivalent unit, $400 per 40-foot-equivalent unit, $450 per 40-foot high cube, $450 per 40-foot refrigerated container, $510 per 45-foot container and $640 per 53-foot container. The surcharge would apply to most origin points in Asia to all U.S. ports.

Hapag-Lloyd announced earlier this month that it was delaying implementation of its proposed peak-season surcharges from June 15 to July 1 on routes from East Asia to the U.S. and Canada. Hapag-Lloyd’s customer advisory listed the proposed surcharges as $320 per TEU and $400 per FEU.

Carriers must provide at least 30-days advance notice for rate increases. As the U.S. import trade from Asia begins to transition to the busy summer-fall peak season, carriers usually test the waters with an early-summer surcharge announcement. In recent years, with so much over-capacity in the trans-Pacific, the early peak-season surcharges have not stuck.

Carriers will then postpone the early surcharges and announce new dates 30-days out. Eventually, when supply-demand is more in balance, carriers begin to capture a percentage of the surcharge, but usually not the full increase. However, as the season progresses and vessels become over-booked, carriers are usually able to retain a higher percentage of the surcharge, especially from smaller importers and NVOs.

Trans-Pacific carriers are working to make rate increases stick by cutting capacity. China Cosco Shipping, the Ocean Three and the G6 Alliance have all cut services, resulting in a 1 percent drop in trans-Pacific capacity equal to 16,000 TEUs, according to Alphaliner.

In recent years, August has been the busiest month of the year for West Coast ports, with another cargo surge coming in October. September is usually busy for East Coast ports, although volumes there tend to be more consistent during the summer and fall months because of capacity constraints at the Panama Canal.

This summer will usher in a new capacity environment with the opening at the end of this week of the third set of locks at the canal. Vessel sizes initially will probably double from about 4,500 TEUs today to ships of 8,000 TEUs to 10,000 TEUs. However, it will take some weeks for carriers to test the new locks and phase in their rotations.

Total U.S. import growth in 2016 is still very much in question, with the Global Port Tracker predicting minimal growth of about 1 percent from 2015. However, IHS Senior Economist Mario Moreno projects 5.7 percent growth.
Contact Bill Mongelluzzo at bill.mongelluzzo@ihs.com and follow him on Twitter: @billmongelluzzo.