U.S. imports from Asia will increase steadily over the next three months as the trans-Pacific trade experiences what is expected to be a modest peak shipping season, industry analysts told a Journal of Commerce Webcast on Thursday.
The good news in this year of slow growth is that import volumes in the period August through October will be noticeably higher than they were earlier in the year. “This is a peak season,” said Paul Bingham, economics practice leader at CDM Smith.
However, Bingham warned, the modest level of growth projected for the remainder of the year will not be enough to support the aggressive rate hikes sought by carriers in the eastbound Pacific.
“I am skeptical about the rate increases,” he said. He added, though, that rates won’t collapse, either.
Sluggish imports from China during the past three quarters have dragged down trade in the eastbound Pacific, said Mario Moreno, Journal of Commerce economist. China’s share of U.S. imports from Asia has dropped to 76.9 percent from its 79.1 percent share several years ago.
Shipments from China are tapering off because of China’s increased labor costs. Importers of furniture, footwear, apparel and other staples of the eastbound trade are sourcing more of those products in other countries where labor costs have not risen as rapidly.
U.S. trade with Mexico, for example, has increased strongly. However, 80 percent of the Mexican trade moves overland, so those imports are not reflected in container volumes at U.S. ports, Moreno noted.
Overall, containerized imports at U.S. ports in calendar year 2012 will increase about 4.9 percent, Bingham said. West Coast imports will rise 5 percent over last year compared with a 4.5 percent increase at East and Gulf Coast ports, he said. The West Coast share of U.S. imports from all countries is actually up 2 percent, to 64 percent, compared to last year, he said.
Lingering concern over the outcome of contract negotiations between the International Longshoremen’s Association and East Coast employers has already caused some modest diversion of cargo to the West Coast, Bingham said.
However, negotiators for the ILA and the United States Maritime Alliance reported Thursday that tentative agreements had been reached on two key issues — new technology and chassis maintenance and repair. That bodes well for a contract agreement before the Sept. 30 deadline.
The spot market freight rate for shipping a 40-foot container from Hong Kong to Los Angeles in the week of July 9 stood at $2,445. That was down 2.9 percent from the previous week, but up 70.3 percent from December 2011, according to the Drewry Container Rate Benchmark, which is charted in the JOC weekly.
Carriers have announced proposed rate increases of $500 per 40-foot container to the West Coast and $700 to all other destinations to take effect in early August.
Bingham said there may be a temporary bump upward in freight rates next month, but continued growth in carriers’ global capacity will make it difficult to sustain rate increases of any great magnitude.