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MORE DISMAL OUTLOOK FOR CONTAINER TRADES, SAYS DREWRY

Monday, April 15, 2019 

Drewry Shipping Consultants says that following the tariff-induced cargo rush of late-2018, container shipments from Asia to West Coast North America dived in 1Q19, denting carriers’ hopes of securing higher annual contracts.

The company's latest Container Shipping Index notes that things can change very quickly in the Transpacific container market. At the time of the last analysis at the end of 2018 of the Asia-West Coast North America trade, the market was booming with eastbound spot freight rates at a six-year peak. However, now that the 'sugar rush' caused by the threatened tariffs on Chinese goods has passed, the market is readjusting to life with much slower volumes and prices.

Available PIERS (port import/export reporting service) data for the first three months of 2019 shows that Asia to US West Coast volumes declined by approximately 3% year-on-year, which compares unfavourably with shipments to the East and Gulf coasts that combined grew by 4%. The fall-off in Asia to USWC demand from 4Q18 was stark at nearly 19% (versus a quarterly decline of 4.5% in 1Q18) although Drewry considers that the West Coast market was always likely to suffer the most from a tariff hangover as shippers had prioritised that gateway as the quickest means to beat the deadline.

Until full inbound data for Canada and Mexico for March is available Drewry cannot give a full picture but despite those data gaps, figures for the first two months and for the US market up make it clear that the trade is decelerating and will be hard pressed to repeat the growth rate of last year.

Drewry concludes that there was always likely to be a hangover from the tariff-induced cargo rush of late-2018, but the sting on Asia-West Coast North America looks to be more severe than carriers expected. This misjudgement looks set to keep annual contract increases in check.

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