WITH the continued strong holiday season imports and front-loading of spring merchandise to beat the 25 per cent tariffs on China scheduled to take effect on January 1, vessel space in the eastbound Pacific is expected to remain tight and spot rates high through the end of the year
WITH the continued strong holiday season imports and front-loading of spring merchandise to beat the 25 per cent tariffs on China scheduled to take effect on January 1, vessel space in the eastbound Pacific is expected to remain tight and spot rates high through the end of the year. Even though the peak-shipping season for holiday merchandise will end in November, this year imports could remain elevated for the remainder of the year if retailers and manufacturers front-load imports before January 1 to get ahead of the tariffs.
'We have moved a tremendous amount of volume up this year, and we'll continue to do so,' due to the tariffs, Alan McTaggert, vice president of global logistics for TTi, told the TPM Asia conference last week.
Spot rates in the eastbound Pacific remained at a five-year high of US$2,503 per FEU to the West Coast, up 7.3 per cent from last week, and $3,304 per FEU to the East Coast, down 0.5 per cent, as importers advanced shipments ahead of the tariff on imports from China, IHS Media reported.
This week's West Coast rate is 77 per cent higher than the $1,414 per FEU spot rate in Week 41 last year. The East Coast rate is 65.9 per cent higher than the $1,991 per FEU rate last year, according to the Shanghai Containerised Freight Index. The last time the West Coast rate exceeded $2,500 per FEU was on January 18, 2013.
CEO of Freightos, Svi Schreiber, said the China-US trade war is sustaining what has been an earlier and longer peak season than in the past. Three rounds of tariff announcements this year 'have motivated many importers to advance orders and beat new tariffs,' he said. Conversely, on the Asia-Europe trade lanes, where there is no trade war, spot rates have declined by 32 per cent over the past four weeks, Mr Schreiber said.
Although the vast majority of holiday merchandise will have been shipped by early November, retailers and manufacturers in the remaining two months of the year are expected to front-load imports that would have moved in January-early February if there was no fear of a 25 per cent tariff hike on January 1.
Pre-booking of vessels two to three-weeks out indicates space will remain tight into November, said Michael Klage, solutions director at TOC Logistics International. Although he anticipates cargo rolling in Asia to taper off once the holiday merchandise has been shipped, space could remain tight due to front-loading of imports to get ahead of the tariffs.
