BIMCO: US Box Imports Break Records Despite Uncertainty Ahead

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  • Container imports on both the US East Coast (USEC) and West Coast (USWC) have grown by 3.7% and 8% in 2018.
  • The increase has been attributed to several factors such as improvement in port infrastructure, connections and frontloading.
  • The impact of trade war is making many stocks full and uncertain regarding the outcome of ongoing trade talks between China and the United States.

According to BIMCO analyst Mr.Peter Sand, Container imports on both the US East Coast (USEC) and West Coast (USWC) had a strong year in 2018, growing 3.7% and 8% respectively in the first 11 months of the year compared to the same period in 2017.

Imports on a high!

Record high levels of inbound laden containers were experienced on both coasts in October with the USWC at 1.09 million TEU and the USEC at 0.91 million TEU according to BIMCO’s own data.

The first two months of 2018 saw the USWC coast’s laden imports increase 11.7% from the start of 2017, with the accumulated growth rate then stabilizing to around 4% for the rest of the year. This volatility in Q1 is always the case due to the Chinese New Year. Imports on the USEC was much more stable throughout the year peaking at 10.4% in the first three months before falling to around 8% for the rest of the
year.

West and East coast records a significant increase

As well as total record highs of imports of laden containers on both coasts in the month of October, several individual ports also achieved never before seen volumes. On the USEC these ports were New York-New Jersey (339,602 TEU), Savannah (205,836 TEU), Virginia (125,404 TEU) and Charleston (98,947 TEU). The Port of Los Angeles was the only West Coast port to set a new record (485,823 TEU).

Prior to the new record set in October, two other months in 2018 raised the previous records of laden container imports on both coasts. These months were July and September on the West Coast and July and August on the East Coast.

Reasons for success

Mr.Peter Sand, BIMCO’s Chief Shipping Analyst commented that the record high levels in October can be explained by several factors, including improving port infrastructure and connections. Frontloading ahead of the then expected increase in tariffs on Chinese goods from 1 January 2019 has also been an important development.

However, with container imports down in November on both coasts, the effects of full inventories and the result of the ongoing negotiations between China and the US will heavily influence what 2019 will have in store for container ports in the US.

Impact of the trade war

The impact of trade war is increasingly making its presence felt with many stocks full and uncertainty regarding the outcome of ongoing trade talks between China and the US, it seems doubtful that the levels of frontloading seen at the end of 2018 will continue into 2019. Especially the unknown as to whether or not tariffs will be increased in March, which would happen if the negotiations fail, is a cause for concern for all companies affected, including the container shipping industry.

Currently, 27.49 million tonnes of US containerized imports are affected by the tariffs which represent 14.2% of total US container imports or 24.7% of those imported on the West Coast based on data for the full year of 2017 and BIMCO’s own estimates.

Future fall to be harmful

Any future fall in container imports by the US and in particular the US West Coast, which is where most of the tariffed goods from China are discharged, will be particularly harmful to the container shipping industry. This is because the volume of containers will be reduced on the front-haul leg of the transpacific trade lane. The front-haul volumes are the capacity setters as they are much higher than those on the backhaul leg. Any lowering of volumes on the trade lane from the Far East to the US will reduce the shipping capacity needed.

Mr.Sand concluded that a decrease in front-haul volumes would result in excess capacity leading to lower utilization which would, in turn, reduce freight rates and earnings on the transpacific network.

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Source: Marine Link

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