The strength of the US container cargo demand remains very much in evidence, with preliminary import volume data for May and June showing imports from Asia declining by only 5.6% in the last 2 months despite the severe disruption from the Trump tariffs. Although imports from China dropped by 24% yoy, volumes from all other Asian origins recorded positive gains, led by Vietnam and Indonesia which grew by 34% and 33% respectively.
The 20% tariff on Vietnamese imports announced last week will not derail the high Vietnam cargo growth rate as it remains below the Chinese tariff rate, which will further fuel cargo shifts from China to Vietnam.
Although US container imports remain largely price inelastic for now, but increased clarity on US tariffs in the coming weeks will reduce the need for shippers to rush out shipments which will put further pressure on Transpacific freight rates that have slipped by over 60% in the last 4 weeks.
Johnson Leung
More capacity cuts needed to stabilize Transpacific freight rates
MSC has made the first move by withdrawing the Orient service but it remains insufficient to bring stability back to the Transpacific market where rates have collapsed below $2,000/feu. The transpacific market remains very crowded with 23 carriers currently active on the Far East-US route including several new entrants that have just joined the trade this year. Further capacity cuts are required in the next 4 weeks, with the removal of some 30,000 teu per week needed before carriers will have any realistic chance of reversing the rate slump.
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