China to US ocean shipping rates fall 40%
Date: Wednesday, October 23, 2019
Source: Supply Chain Dive
- Ocean freight rates from China to the U.S. East and West Coast have fallen year-over-year (YoY) throughout October, favoring shippers as they head into peak season. Rates from China to the East Coast are down more than 22% from the same time last year and down more than 42% to the West Coast as the trade war between the two countries continues.
- The Ports of Los Angeles and Long Beach and The Northwest Seaport Alliance (NWSA) saw YoY declines in loaded import volume in September, down 2.8%, 0.6% and almost 13%, respectively. The Port of Oakland however did see an almost 3% uptick in volume in September.
- On the East Coast, the Ports of Virginia and Savannah saw YoY loaded import volume increase about 5% in September.
Some of the volume declines on the West Coast are the result of importers continuing "to work down excess inventory from front-loading of shipments in advance of tariffs earlier this year," NWSA explained in its September volume release. Many retailers and importers decided to stockpile inventory in an attempt to avoid potential tariff increases earlier in the year.
One port bucking the falling volume trend is the Port of Savannah, which experienced its busiest month ever in August. While loaded import volume went down from August to September, it was still up YoY. "We’re seeing an early and strong start to peak season at the Port of Savannah," Georgia Port Authority Executive Director Griff Lynch said in a statement last month.
The National Retail Federation expects importers to front-load more inventory next month ahead of 15% tariffs on part of list four expected to start on December 15. the organization said earlier this month.
"The strength of retail consumption will push any meaningful slowdown in imports into next year, when the full impact of the tariff wars will be translated into a consumption tax felt by consumers," Hackett Associates Founder Ben Hackett said in a statement.
Earlier this month, President Donald Trump announced the U.S. will hold off on the tariff hikes originally scheduled for Oct. 15, but Freightos doesn't expect this to have much impact on freight rates between the two countries.
"As President Trump proved in May, deferrals can be axed at very short notice, making for a mercurial trade environment whereby importers have to assume the worst in order to avoid massive losses," Eytan Buchman, the chief marketing officer for Freightos, said in a press release emailed to Supply Chain Dive. "Nevertheless, a smattering of optimistic carriers tested the waters with mid-month price increases."