The outlook for trade from China is weak, but surprisingly some shippers have reported difficulty obtaining space on eastbound transpacific container services out of North China ports.
Earlier this week, the Associated Press reported
that China's economy “might be cooling even more sharply than expected,” citing data from the country’s General Administration of Customs that showed June exports were 3.1-percent lower than the same period a year earlier. Imports were off by 0.7 percent.
The website for China’s People’s Daily newspaper
said Chinese customs reported “the third quarter may be hit by falling demand.”
It noted that the China Export Leading Index registered 36.1 percent at the end of June, down from 37.6 in May. The index, launched in June 2012, tries to forecast foreign trade trends over a three-month period.
A survey also showed that 49.2 percent of enterprises reported smaller orders from a year earlier, while 43.8 percent were "not optimistic" about the outlook over the next three months, People's Daily
Nevertheless, an executive at one of the country's largest retailers, who did not want to be identified, told American Shipper
it was having trouble finding space for cargo out of north China to the U.S. Several other large store chains said they were having no problems.
“I hear that a couple of carriers are full from Shanghai/Ningbo, but not all. I think a bigger problem is that there seems to be a lot of confusion about service strings and alliances," Sara Mayes, the president of the Gemini Shippers Group, said.
A spokesman for a large NVOCC also said his firm had encountered “a few space issues already — not to the point to get overly concerned, but enough to recommend to our commercial teams that they talk to our customer base about proper forecasting in light of the upcoming peak season.”
“We remain cautiously optimistic that the peak season will not be as tight as in the past," he added. "But [it's] hard to know at this stage.”
On July 1, the Transpacific Stabilization Agreement (TSA) had recommended a $400-per-40-foot-container (FEU) general rate increase (GRI), and it has announced a $400-per-FEU peak season surcharge to take effect August 1.
On June 28, the Shanghai Container Freight Index (SCFI) showed spot rates from Shanghai to the U.S. West Coast rose 15 percent to $2,114 per FEU, and rates rose another $17 to $2,131 per FEU on July 5. Today, however, the Shanghai Shipping Exchange, which publishes the SCFI, said the rate from Shanghai to the U.S. came down $88 to $2,043.
The SCFI showed rates to the East Coast have followed a similar pattern, rising 13 percent on June 28 to $3,361 per FEU, then increasing to $3,373 on July 5 before falling to $3,315 today.
The report of tight capacity is surprising since statistics from BlueWater Reporting said estimated weekly allocated space on eastbound transpacific service rose 6.05 percent to 349,403 TEU on July 7, 2013 compared to June 24, 2012.
But a senior carrier executive explained that tight capacity can occur at individual ports as container lines have to perform a tricky forecast on how much cargo to load at each terminal they call.
If they load too many boxes at a port early in a rotation, they may be unable to accept cargo at a later port and be forced to roll boxes for the next sailing. Likewise, if they leave space on the ship open, they run the risk that promised cargo will not materialize when they get to a port later in the rotation, and those ships will not be fully laden when they cross the Pacific.
“It’s a gamble,” the executive said.
Albert Wei, president of the NVOCC Vizion Logistics, noted that “when space is tight, carriers will move cargo that pays higher rates first. Since NVOCCs are subject to GRI and peak season surcharge, we pay higher rates and hence can get space for clients willing to pay the higher rates.” - Chris Dupin