January cargo spike could suggest import recovery in eastbound trans-Pacific
US imports from Asia in January rose 16% from the year-earlier period, marking the fourth consecutive month of year-over-year increases as the eastbound trans-Pacific trade could be poised for a solid rebound from a lackluster 2023.
The 1.54 million TEUs of Asian imports that moved through US ports last month comprised the second-highest total since August 2022, surpassed only by the 2023 peak of 1.56 million TEUs last October, according to PIERS, a sister product of the Journal of Commerce within S&P Global.
US imports from Asia in 2023 dropped just over 13% from 2022 as retailers depleted inventories that had filled their warehouses to capacity during the previous two years. After record holiday sales, retailers entered the new year forecasting monthly year-over-year growth in imports at least through June.
Many factories in Asia closed on Feb. 10 for the annual Lunar New Year holidays, which normally last a week or two. As a result, US imports from Asia will likely drop in late February and well into March.
Nevertheless, on a year-over-year basis, those import volumes will likely be higher than in February and March of 2023 when imports totaled just 1.08 million TEUs in each month. Those were the lowest monthly Asia import volumes since imports plunged to about 869,000 TEUs in March 2020 as the pandemic began.
Second half of 2024 still murky
There is still a great deal of uncertainty about how strongly imports will rebound during the summer-fall peak shipping season. While US retailers forecast year-over-year growth in the second half of 2024, their negotiating strategy for service contracts in the eastbound trans-Pacific is based on a premise that supply will still be significantly greater than demand.
The uncertain security situation in the Red Sea and drought restrictions along the Panama Canal are also complicating this year’s outlook.
Carriers, on the other hand, say consumer demand will remain robust, based on improving macroeconomic numbers on inflation, GDP growth, unemployment levels that remain near a 50-year low and lower inventories-to-sales ratios. They expect imports in the second half of the year will build toward a strong peak season.
Forecasting coastal market shares going forward is likewise difficult as there has been no consistent pattern since the International Longshore and Warehouse Union (ILWU) last August ratified a new six-year contract after 15 months of contentious negotiations with waterfront employers. West Coast port managers say they expect to win back much of the discretionary cargo they lost to East and Gulf coast ports during the lengthy labor negotiations.
The West Coast’s share of Asian imports in January increased to 56.5% from 54.7% in December, but December was down from 58% in November, which was up from 53.7% in October, according to PIERS. The East Coast’s share of Asian imports in January was 34.5%, down from 35.8% in December, while the Gulf Coast’s share of 8.7% slipped from 9.3%.
Source: Journal of Commerce (JOC)
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