Spot rates in the westbound Pacific took a sizable drop this month due to declining US exports to Asia, which are resulting in especially low vessel utilization rates. The normal strong rebound, which should begin in November, could be muted as a result.

Imports from China were down 2 percent in July and 4.4 percent below the same period seven-month period in 2018.

Reversing course, Global Port Tracker is now projecting monthly year-over-year declines, or minimal increases, in US merchandise imports in the trans-Pacific during the peak season.

Spot rates in the eastbound Pacific are starting to firm, but will not increase as dramatically as they did during the 2018 peak season because importers are taking tariff announcements in stride.

With US import growth of only 1.4 percent from all of Asia in the first half of 2019, and a 5 percent decline in imports from China, the six blanked sailings announced for June and July could be followed by others if volume growth disappoints during the coming peak season.

Despite strong expected consumer demand, uncertainty over the outcome of the US-China trade talks could reduce growth in US electronics imports in 2019, after 5.2 percent growth in 2018.

Before May 5, when President Donald Trump announced that tariffs on $200 billion of Chinese imports would rise from 10 percent to 25 percent, carriers were relatively sanguine about 2019 and for good reasons.

Post-consolidation, US container trade has been dominated by the largest ocean carriers and alliances, but smaller, independent lines continue to find a market in the trans-Pacific.

Turloch Mooney, senior editor, global ports, JO

Last year's decline in US container exports, especially those bound for Asia, has continued into the early part of this year as the US-China trade war lingers and outbound rail costs rise.

The annual survey of shipper views on the most important issues in the trans-Pacific trade.

Spot rates in the eastbound Pacific increased for the second straight week.

Eastbound trans-Pacific spot rates fell for the fourth straight week.

There are still more unknowns than knowns about the US-China tariff ‘truce,’ but this is clear: the extra time until March 1 helps shippers by giving them a longer time cushion before higher tariffs could potentially start.

The US imports surge from Asia since mid-summer is due largely to savvy capacity management by carriers individually and through vessel-sharing alliances. However, retailers’ front-loading of imports to stay ahead of tariffs on mainland China led to an earlier-than-expected peak-shipping season this summer and now to fast-forwarding of spring merchandise.

“There is no will or reason to merge the two companies. SM Line will continue to build its own business models and we will do our part to survive in the market independently,” said SM Line CEO Kim during a meeting at the company’s headquarters in Seoul.

Some are predicting a continuation of peak season-like conditions not just through the end of the year but continuing until the Chinese New Year holiday beginning in early February. Beyond that, two sector variables will determine the extent of anticipated first-quarter weakness in spot rates.