Air of Caution Clouds Earlier Bullish Transpacific Predictions
Date: Monday, December 10, 2018
Source: Splash 247
Some caution has been thrown on predictions made by the freight platform, New York Shipping Exchange (NYSHEX), carried on Splash yesterday that the transpacific peak season could extend into the first quarter of next year.
In a note to clients issued earlier this week, 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.”
Despite this bullish outlook, rates suggest the peak season is finally petering out. For the past three weeks, Asia-US west coast spot rates have declined as they have also to the US east coast for the past fortnight.
Zvi Schreiber from rival freight platform Freightos, speaking with Splash, argued that the peak season is clearly coming to a close.
“There is a limit to how much front-loading you can, or should, do. Now, with a 90-day reprieve to January 1’s scheduled tariff increase, and with most retailers already stocked up for the Christmas rush, transpacific prices have begun falling,” said the Freightos CEO, adding: “Unless the trade war has another dramatic turn of events, peak season is largely over, and prices should continue falling until the ramp-up to Chinese New Year.”
Peter Sand, chief shipping analyst at global shipowning body BIMCO, was also not too supportive of a bullish Q1 environment for the transpacific box trades, telling Splash: “We believe stocking up on inventories prior to the latest round of tariffs meant that July came in as the highest months of North American imports this year, as opposed to August in earlier years. I would like to see US Christmas sales coming in at a high level before I call Q1 to be strong. It is a a bit too early to call.”
Sand also observed that US consumer confidence) fell in November for the first time in five months, cooling from an 18-year high.
Analysts at Alphaliner also remain circumspect as to what effect the 90-day tariff war climb-down will have on the key Asia-US container tradelane.
“The container cargo surge on the eastbound Transpacific route is set to recede in the coming weeks, despite a last minute truce between China and the US,” Alphaliner stated in its most recent weekly report.
Carriers already anticipate a drop in bookings, Alphaliner pointed out, with at least six sailings to be cancelled in December.
“Further rate volatility is expected in the coming months, with significant uncertainty over cargo volumes while a final resolution of the Sino-US trade negotiations remains doubtful,” Alphaliner concluded.