Carriers show caution in slow-growth eastbound trans-Pacific

Carriers show caution in slow-growth eastbound trans-Pacific

Six of the carriers in the eastbound trans-Pacfic increased their volume of laden imports from Asia through September, while four lines carried fewer imports. Photo credit: Shutterstock.com.

The top 10 carrier rankings in the eastbound trans-Pacific trade remained constant in the first three quarters of the year as carriers avoided cutting rates to grab share in a market that saw imports increase only 1.7 percent from the year-ago period.

Six of the carriers increased their volume of laden imports from Asia, while four lines carried fewer imports. Except for Evergreen Marine Corp., which increased its import liftings by 11.1 percent, import volumes carried by other lines moved in low-single digits.

Cosco Shipping/OOCL remained the largest carrier of US imports from Asia with 2.1 million TEU, although that was down 1.9 percent from the 2.14 million TEU it handled in January-September 2018, according to PIERS, a JOC.com sister company within IHS Markit.

Six carriers increased their eastbound liftings: Hapag-Lloyd, Yang Ming, HMM, Evergreen, Ocean Network Express (ONE), and CMA CGM/APL. The four carrying fewer laden imports year-over year were Zim Integrated Shipping Services, Mediterranean Shipping Co., Maersk Line, and Cosco/OOCL.

Maersk’s volume was down 3.5 percent, while MSC’s slipped 3.3 percent. In an earnings call with analysts last week, Maersk Group CEO Søren Skou said the liner is concentrating on higher-paying cargo rather than market share in a slow-growth market, and it paid off in terms of profitability.

“We took some comfort in that we delivered this profitable result at a time when we were not getting a lot of help from the market from growth or from freight rates,” Skou said during Maersk’s earnings call.

Spot rates, which provide a real-time snapshot of supply and demand in the eastbound trans-Pacific, have languished much of the year. The spot rate from Shanghai to the West Coast last week was $1,351 per FEU, which was down 46.6 percent from the same week last year. The East Coast rate was $2,398 per FEU, down 33.9 percent year over year, according to the Shanghai Containerized Freight Index (SCFI), which is published in the JOC Shipping & Logistics Pricing Hub.

The 2019 peak-shipping season is over as the holiday merchandise that will be sold during the Black Friday sales next week has already entered the country. Year-over-year import volume comparisons are expected to decline in the coming weeks because November and December 2018 were busy months as retailers and manufacturers front-loaded imports to get ahead of tariffs in the United States-China trade war that had been scheduled to take effect on Jan. 1, 2019.

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