Transpacific cools as American importers become overstocked

Transpacific cools as American importers become overstocked

Santa’s sleighs have been reined in for the year with news the transpacific box trade bull-run has reached its winter solstice.

Transpacific pricing usually picks up mid-December as importers look to replenish after Christmas. But, wary of trade tariff increases, many importers are already overstocked. As a result, the mid-December general rate increases (GRIs) were cancelled. Online freight platform Freightos reports prices have dropped by just over $100 to both the west and east coasts of North America from Asia.

“The US-China trade war, not seasonality, is currently driving transpacific prices. I don’t envy procurement managers right now. Should they be using this time to make some hard sourcing decisions? Changing suppliers is always fraught with risk, let alone moving production to another country,” commented Philip von Mecklenburg-Blumenthal, a vice president at Freightos, in a weekly report.

Freightos is predicting rate volatility will likely increase at least until Chinese New Year.

“Carriers, who don’t have the capacity to react to sudden changes in demand, are now worried that if the tariff trade war escalates again, that they will be facing surplus capacity and plunging prices,” the Freightos executive added.

Investment bank Nomura has predicted in a recent report that the slowing growth of Chinese exports in November could be followed by a further slowdown next year. Nomura believes this could have a noticeable impact on ocean volumes especially on the eastbound transpacific trade next year.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Related Posts