The shipping market in Asia to the United States is facing major turbulence in May, with U.S. importers canceling or suspending orders due to tariff hikes, and shipping companies dramatically increasing the number of BlankSails to meet slumping demand.
According to Alan Murphy, CEO of Sea-Intelligence Maritime Analysis, the shipping company expects shipments in Week 18 to be 28% lower than originally expected and a 42% drop in Week 19 from Asia to the East. This is in line with the forecast of the Port of Los Angeles, which expects container volumes to fall 14% month-on-month in the 18th week and a 38.6% decline in the 19th week. Compared to last year, imports in the first week of May will decrease by 43% year-on-year.
China's exports were hit the hardest, with Chinese orders falling 37 percent since March 31, while exports to Vietnam and Cambodia rose 10 percent. This is due to the introduction of a 90-day tariff buffer period on Cambodian goods by the United States, which temporarily reduced the expected tax rate of 46%-49% to 10%.
ALTHOUGH DEMAND IS LOW, MAJOR CARRIERS SUCH AS EVERGREEN, COSCO AND OOCL HAVE NOT CANCELLED ROUTES ALTOGETHER, INSTEAD OPTING TO CONSOLIDATE SERVICES AND BYPASS CERTAIN PORTS. Take the long-established Hangzhou Bay Express for four consecutive weeks cancelling Los Angeles and Oakland sailings, reducing operational capacity by about 8,000 to 12,000 TEU per week.
COSCO's Bohai Express is expected to cancel a service to Long Beach in early May, and HibiscusExpress and Changjiang Express will each skip a service from China. OOCL'sCOSCO Thailand versusOOCL Utah It has also been removed from the May shift.
Unlike a rapid rebound in inventories after the 2020 pandemic, this wave will fall back or will last. With tariffs currently at 145% on Chinese imports, many U.S. retailers have pre-stocked supplies, some even have 3.5 months of core inventory, and store them in hedging warehouses, looking to see if the U.S. will adjust its policy.
A senior independent shipping company said: “We have not seen a surge in orders at this time, but demand remains weak and it is expected to reduce berths in China ports.”
For shippers and logistics operators, it is now most important to remain flexible, keep a close eye on tariff trends, and consider diversifying supply chain sources. América routes are still full of variables, and proactive planning and rapid response will be key.
Source: https://www.joc.com/article/asia-us-blank-sailing-forecast-for-may-increasing-amid-cancellations-5988996
