- There is no relief in sight for ocean shippers looking for a downturn in rates on the Transpacific route, as spot prices have risen another 7% in the last week between China/East Asia and the North American West Coast, according to figures from Freightos.
- Volume flowing to the West Coast is expected to stay elevated in the coming weeks, with the forecast from the Port of Los Angeles showing volumes up nearly 503% YoY in the second week of March.
- Bookings did come down during Lunar New Year, as some businesses were still closed, but trucking capacity was higher than usual for the period, according to Hapag-Lloyd CEO Rolf Habben Jansen. "The indications are that the dip will be less than it normally is," Jansen told reporters last week, talking about the seasonal downturn experienced as a result of Lunar New Year. "But it's still a little bit too early to say that."
Spot rates from China/East Asia to US
How long the demand for Transpacific freight will last depends on how much consumers keep buying, potentially leaving businesses to work through a tight market to restock. The volume comes after inventories were purposely kept low in the early days of the pandemic, only to be met with a surge in consumer demand that no one expected, Jansen said.
"That's the demand side of it, which definitely has caught a lot of people by surprise," he said.
Despite the efforts by ocean carriers and port workers to move unprecedented levels of cargo through the first two months of the year, retail inventories are still well below where they were at this point last year, according to figures from the Census Bureau.
"This of course begs the question — when will the inventories be rebuilt?" Sea-Intelligence CEO Alan Murphy said in a press release.
That really depends on how long consumer demand sticks around, Murphy said. And the latest figures for January retail sales show demand is still strong.
Murphy said he expects that if retail sales don't fall, "then we will see import growth for the entirety of 2021 remain elevated compared to 2019, simply in order to rebuild inventories. By early 2022, we might then see year-on-year growth temporarily approach zero, but this is a short-term phenomenon, associated with the excess inventory build-up seen in 2021."
The retail industry has suggested that import records would continue through the first half of 2021, without making any projections past that point. But if Murphy is right — and retail sales remain elevated — then port workers and ocean carriers could be in for a long year while shippers could be struggling with congestion for some time to come.
Container xChange had suggested last month that Lunar New Year could ease issues around equipment availability. And there are some early sings that Asian exporters are having an easier time with Container xChange's index for Shanghai rising above 0.5 last week — a sign that more containers are entering the port than leaving.