Trans-Pacific

Reduced backlogs in Southern California due primarily to the diversion of cargo to the East and Gulf coasts have shifted the congestion problems to ports in those regions.

While retailers normally divert some discretionary cargo to ports on the East and Gulf coasts in years when the ILWU and PMA negotiate a new contract, the shift away from the West Coast has been particularly dramatic this year.

Although trans-Pacific carriers are now rushing to blank sailings, the capacity overhang in the trade lane is so great that industry analysts say excess space will continue to plague the trade lane.

The effects of an earlier-than-normal peak season and canceled retail orders have begun to show in US import data, with volumes from Asia in September falling to their lowest level of the year.

As carriers get even more aggressive in pulling trans-Pacific capacity, they are setting up the market for a spot rate rebound at the first sign of a pick-up in volumes.

Highlighting the buoyant market conditions for the first nine months of 2022, Cosco Shipping said export freight rates on the main trade routes “were maintained at a high level.”

US retailers are forecasting declining imports through the end of the year even though holiday merchandise sales are expected to be strong.

Rates and volume on the major trade lanes out of Asia fell during the third quarter, but not enough to slow OOCL’s revenue growth.

A vigorous blank sailings program on the Asia-North Europe trade lane has yet to stem the rapid decline in spot rates that have fallen more than 50 percent since Jan. 1.