Correction: The original version of this story incorrectly stated that there was a 19 percent decline in US imports from Asia, due to an error in the calculation of PIERS data. The JOC apologizes for the error.
US imports from Asia rose 4.2 percent year over year in July, with analysts forecasting a retraction to slight uptick in volumes in the traditionally busy August-October period.
However, eastbound spot rates to the West Coast last week fell 7.2 percent from the previous week, and were 28.7 percent lower than the same week last year, according to the Shanghai Containerized Freight Index published under the JOC.com Shipping & Logistics Pricing hub. That indicates most ships leaving Asia were not full in the first 10 days of August.
US imports from Asia are up 2.1 percent from January-July 2018, according to PIERS, a sister product of JOC.com within IHS Markit. Imports from China were down 2 percent in July and 4.4 percent below the same period seven-month period in 2018. Imports could drop further this fall because 10 percent tariffs on the remaining $300 billion of imports from China will take effect Sept. 1 for some items and Dec. 15 for other goods.
West Coast ports so far are experiencing the brunt of the decline, with total laden US imports dropping 2 percent in the second quarter while imports through East Coast ports increased 7 percent year over year, according to Sea-Intelligence Consulting. It’s not clear whether that’s because last year’s front-loading of imports to avoid higher tariffs was concentrated on the West Coast or due to other factors.
Laden imports in July totaled 1.543 million TEU, up from 1.480 million TEU in July 2018, according to PIERS. China accounts for more than 70 percent of US imports from Asia.
Year over year monthly comparisons of import volumes show both the seasonality of the eastbound trans-Pacific, the largest US trade lane, and the impact of the tariffs that have been phased in this year. Imports from Asia increased 5.5 percent in January 2019 from January 2018 in the traditional pre-Chinese New Year ramp-up in shipments before many factories in Asia close for the holidays.
Year-over-year imports declined 7.1 percent in February and 0.2 percent in March, due to the post-Chinese New Year lull, but also because US retailers and importers last November and December front-loaded imports ahead of the threatened 25 percent tariffs originally scheduled to take effect on Jan. 1, 2019. The front-loading reduced import volumes in early 2019.
Tariffs on imports from China increased from 10 percent to 25 percent on June 1. With shippers moving up shipments to get ahead of the tariffs, imports from Asia increased 5.8 percent in April and 5.8 percent in May from the same periods last year. Containerized imports then declined 0.1 percent in June and were up 4.2 percent in July, according to PIERS.
East Coast ports largely unaffected so far by trade war
A separate report on the second quarter US imports from Asia in dollar terms by Sea-Intelligence Maritime Consulting shows that West Coast ports are being hit quite hard by the Trump administration tariffs, while East and Gulf Coast ports have been “largely unaffected.” The analysis, derived from US Census Bureau statistics, found containerized import cargo through the eastern ports increased 7 percent in the second quarter from the second quarter of 2018. West Coast imports declined 2 percent in the second quarter.
Sea-Intelligence gives no explanation for the variance. One possible contributor is that the front-loaded volumes in late 2018 were concentrated heavily through Los Angeles-Long Beach, causing distribution facilities in Southern California to fill up. The congestion backed up to the marine terminals. Since the spring 2019 merchandise sat in the warehouses for several months, the congestion continued to plague the gateway well into spring, which possibly caused importers to ship through other ports.
Sea-Intelligence in its Sunday Spotlight also traced the rapid growth of US imports from some other Asian countries this year. Based on Census Bureau’s dollar values for US containerized imports, Vietnam was the big winner, with imports year to date up 21.1 percent. Imports from Taiwan increased 18.5 percent, imports from Thailand were up 14.3 percent, and Malaysian imports were 20.4 percent higher. Taiwan and Vietnam are closer to China geographically, and they have advanced production capacity and transportation infrastructure development.
The report shows the devastating impact of the trade war on China and Hong Kong. Containerized imports from China by dollar value declined 10 percent year-to-date, while imports from Hong Kong plunged 45.6 percent, Sea-Intelligence reported.
Contact Bill Mongelluzzo at firstname.lastname@example.org and follow him on Twitter: @billmongelluzzo