Asia import volumes jumped in April as US shippers navigated GRIs
US imports from Asia hit a six-month high in April as shippers, faced with the prospect of higher costs as ocean carriers attempted to push through a pair of rate increases, rushed their cargo on the eastbound trans-Pacific.
Asia imports to the US hit 1.35 million TEUs last month, according to PIERS, a sister product of the Journal of Commerce within S&P Global. That’s the highest level seen since October 2022 when imports hit 1.402 million TEUs, PIERS data shows.
While April imports were down 18.6% from the same month a year earlier, they were up almost 25% from March.
Imports from China alone also staged a month-to-month rebound. April saw imports from China reach 793,604 TEUs, up from 581,479 TEUs in March.
Overall container imports to the US in April fell 17.4% year on year to 2.02 million TEUs, PIERS data shows, but were up from 1.75 million TEUs in March.
First GRIs pushed through
US shippers last month were confronted with a round of general rate increases (GRIs) that ranged from $600 to $1,200 per FEU that went into effect April 15. To support those GRIs, ocean carriers canceled many weekly vessel services from Asia.
Sea-Intelligence Maritime Analysis said that 502,400 TEUs of capacity, amounting to nearly 20% of ships deployed to both the North American West and East coasts, was blanked during April. The result was that ships saw over 80% utilization in the trans-Pacific trades, according to data from Linerlytica.
A subsequent GRI due to go into effect May 1 was not successful because demand in the eastbound Pacific was not surging and shipments were generally not being rolled at Asian load ports, sources previously told the Journal of Commerce.
Still, carriers are again trying to push through rate increases for May and June. Sea-Intelligence said in its weekly report published last Sunday that carriers, including CMA CGM, Cosco, Evergreen, Hapag-Lloyd, HMM, Ocean Network Express and Zim Integrated Shipping are seeking GRIs of $1,000 per FEU effective May 15 and June 1.
So far, there appears to be little market reaction to those GRIs. After reaching a mid-April peak of $1,633 per FEU, the trans-Pacific spot rate from Shanghai to the US West Coast has since fallen to $1,385 per FEU as of May 12, according to the Shanghai Containerized Freight Index (SCFI). Likewise, the spot rate from Shanghai to the US East Coast sat at $2,381 per FEU as of last Friday, down from the mid-April reading of $2,565 per FEU, the SCFI shows.
Ocean carriers have not been as aggressive in cancelling sailings in May as they were in previous months. Sea-Intelligence data shows only 315,500 TEUs of capacity was blanked in May, amounting to just about 12% of deployed ships in the trans-Pacific.
In a May 1 supply chain report, consultant Jon Monroe said that more sailings need to be cancelled if ocean carriers hope to get higher rates. “What I find the most interesting is the lack of blank sailings to push the rates up,” Monroe said. “There is still plenty of space.”
But much of that space will remain empty as 2023 volumes are not expected to close the gap with 2022 levels until late in the third quarter. The National Retail Federation (NRF) forecasts that May 2023 import volumes will be down 23.5% from the year-earlier levels. Only by September will the year-on-year deficit be whittled significantly, with imports for that month expected to be just 3.4% lower than September 2022, according to the NRF.
And more capacity is expected to reach the market. Monroe said that container ship capacity will reach 30 million TEUs in 2023 as a result of newbuilds coming into service, up from 25 million TEUs in 2022.
Source: Journal of Commerce
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