Trump tweets unlikely to move container rates

There is not enough time to front-load shipments if Trump acts later this week.

Trump tweets unlikely to move container rates

There is not enough time to front-load shipments if Trump acts later this week.

Trump tweets unlikely to move container rates

There is not enough time to front-load shipments if Trump acts later this week.

 

   President Donald Trump’s Sunday tweets about tariff increases likely won’t spark increases in ocean freight rates, says Eytan Buchman, the chief marketing officer for Freightos, an online freight marketplace that has partnered with the Baltic Exchange to create the Freightos Baltic Index for container rates.
   
On Sunday, Trump indicated that 10 percent tariffs across $200 billion worth of goods from China in yearly import value will increase to 25 percent on Friday. He also mentioned that other untaxed goods from China will “shortly” be tariffed at 25 percent.
   
“The S&P 500’s rapid recovery yesterday may indicate a false alarm, which will likely prevent spot rates from rising,” said Buchman.
   
He noted that “in the past, tariffs or tariff spooks did increase shipping volumes, mostly by pushing importers to front-load shipments to earlier in the year.” That’s what happened last fall and winter.

   “However, there’s virtually no time for shippers or forwarders to ship fast enough to beat Friday’s slated tariff increase without switching to expensive priority rates,” Buchman said.
   
He added that “the spot ocean market shows that while rates are quite strong for the time of the year, radical growth is likely not in the cards in the near future.
   
“While May last year saw a 22% rate increase on China-U.S. West Coast lanes, rates this May were flat, indicating relatively stable demand. That’s not to say the ocean freight market is weak — global Freightos Baltic Index rates are 12% higher than the same time last year, and China-US West Coast rates 20% higher at $1,557 per FEU.
   
Philip Damas, head of Drewry Supply Chain Advisors, said, “The Drewry Global Freight Rate Index for spot rates for April is up 20% on April 2018 and up 2% on March 2019. May spot rates started higher than April spot rates.”
   
He added that rates gathered by the Drewry Benchmarking Club of 80-plus multinational shippers show “double-digit increases in transpacific eastbound rates for May, following smaller increases in contract rates in previous months.”
   However, t
he freight rate benchmarking company Xeneta said last week that its monthly XSI freight index shows long-term container freight rates are falling.

   “After two months of steady increases in long-term contracted rates for containership operators, the latest XSI Public Indices report from Xeneta shows a reversal of fortunes, with rates falling by 4.2%,” the company said.
   The company said all major trading corridors saw month-on-month declines, plunging the indices to its lowest level since June 2018.
   
Patrik Berglund, the chief executive officer of Oslo-based Xeneta, said, “This is a real turn of events. The past two months have seen the industry halt a long-term rates decline and achieve some much needed respite, with rates rises of 2.5% in February and a more modest 0.5% in March. In that context a 4.2% fall comes as a slight shock to the system and will have many in the industry reassessing the short- to medium-term forecasts for their businesses.
    “The reasons for the decline are complex, but certainly overcapacity on the European trades (with Ocean Alliance increasing activity and new slots for a standalone HMM service) and continued fallout from the U.S.-China trade war (in which shippers initially front-loaded cargoes to avoid additional cost) have added to longer-term structural issues and political/economic uncertainty,” Berglund said.
   He said “suppliers have benefited from a market in flux,” citing trade wars, the requirement that next year ships not equipped with scrubbers will have to use low-sulfur fuel and Brexit.
   
“Now the situation is turning. As always, uncertain waters may lie ahead for the contract market,” he added.
   
Xeneta said its April XSI Public Indices showed “rates figures firmly in the red. European imports fell by 4.8% (2.3% down on year end 2018), while exports declined by 1.9% (2.4% down for the year). For the Far East, the import benchmark dropped by 2.1% while exports slumped 3.6%. The export figure has now fallen by 4.5% since the start of the year and 9.7% between July 2018 and April 2019, indicating a prolonged downward rates trend for the segment to contend with.
   
“U.S. trades have suffered the same fate as their counterparts in April, derailing what was beginning to look like a steady upwards trajectory. After two straight months of increases, the export benchmark fell by 2% (although it remains 6.4% higher than year end 2018), while the import index dropped by 3.4%. It is now 3.2% down year-on-year,” Xenata said.
   
Berglund said, “Looking ahead it’s difficult to identify obvious breaks in the clouds. Geopolitics remain stubbornly unpredictable, with ongoing uncertainty over U.S.-China relations, while no one — not even the people at the very top — appear to have a clear view of what is happening regarding Brexit and its consequences.”

We’re spending about $15 billion a year more from the [federal highway] trust fund than we’re bringing in revenue, and that kind of imbalance between revenue and spending can’t continue.
 

The Port of Hamburg handled 2.3 million TEUs in the first quarter, which was a 6.4% growth in container handling. The U.S. became the port's second-largest partner in container traffic with 121,000 TEUs.

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Trump tweets unlikely to move container rates

There is not enough time to front-load shipments if Trump acts later this week.

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Trump tweets unlikely to move container rates

There is not enough time to front-load shipments if Trump acts later this week.

May 07, 2019 on Dec 27, 2018AmericanShipper.com