The peak season on the transpacific shows no sign of ending with the volume surge set to carry on past Christmas and into the first quarter of 2019, according to freight platform New York Shipping Exchange (NYSHEX).
In a note to clients issued yesterday, Gordon Downes, the CEO of NYSHEX, stated: “What a peak season – and it’s still going! Now that the China tariff hikes on US imports have been postponed for 90 days, importers will front-load even more 2019 spring/summer cargo in the first quarter, and spot rates are likely headed upward.”
Major US ports have been recording record volumes this year with the transpacific experiencing its best year so far this decade.
Commenting on Downes’s bullish outlook, Andy Lane from CTI Consultancy in Singapore told Splash today: “It will depend on the size of inventories presently held, and how these drain in the lead-up to Christmas. It does appear that a lot of cargo was advanced to arrive before tariffs were planned to be hiked, and there is a limit as to how large an inventory can be before it becomes inefficient. So it might be that we see a short-term lull, before a mid-term peak and then the traditional Lunar New Year trough will arrive.”
For the past three weeks, Asia-US west coast spot rates has declined as the peak softened, with Lane telling Splash shippers and carriers alike will be watching the latest figures due to be published on Friday very carefully.
Data released by logistics giant Kuehne + Nagel today shows world trade last month hit a new historical high with the main driver cited as strong domestic demand in the United States and also in China.
Industry consultant Neil Dekker warned that liners might face headwinds come the second quarter of 2019.
“Chinese New Year falls on February 5 next year and if importers want to miss the new April 1 tariff deadline if it is imposed, they will need to ship by end January latest,” Dekker pointed out, adding: “The peak season could continue, but I am hearing that some importers have no room left for any more inventory – they are full.”
This poses another issue, according to Dekker.
“It may be that carriers get another chance to push up rates substantially before end January, but the flip side is that 2Q and 3Q volumes are very likely to be underwhelming in terms of percentage growth as this cannot clearly continue,” Dekker said, adding: “With 22 ULCVs of at least 14,000 teu joining the fleet in the first six months of next year, lines will have deployment issues as well. Weaker 2Q spot rate levels will also start to influence contract rates from May/June next year.”