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US inventories stocked ahead of expected drop in imports

Retailers have prepared before peak season and have plenty of merchandise in stock

INVENTORIES of US retailers are fully stocked amid concern that imports are expected to decline to the lowest levels since early last year, according to a forecast.

The National Retail Federation and Hackett Associates expects a slowdown because retail sales for the first eight months of 2022 are 7.5% higher than 2021, and annual growth is expected to be between 6% and 8%.

“The holiday season has already started for some shoppers, and thanks to preplanning, retailers have plenty of merchandise on hand to meet demand,” said NRF vice-president Jonathan Gold. “Many retailers brought in merchandise early this year to beat rising inflation and ongoing supply chain disruption issues.”

US container imports fell 11% in September compared with the same period a year earlier, according to a report by logistics consultant Descartes, though volumes were 9% higher than in September 2019.

The NRF projects that October imports in major US ports will decline 9.4% year on year, while further declines of 4.9% and 6.1% are expected for November and December respectively. It forecasts second half of the year imports will drop 4% compared with last year.

However, it still forecasts that 2022 volumes will eclipse 2021 by 0.7%, owing to a strong first half of the year, which saw volumes rise 5.5% year on year. The NRF’s projection of 26m teu in 2022 is also 20% higher than 2019 volumes.

August was a particularly strong month for ports on the east and US Gulf coasts, as New York and New Jersey, Houston and Savannah handled record import volumes, while Virginia had its second-strongest month for imports.

While the port of Virginia expects volumes to remain consistent throughout the rest of the year, Georgia Port Authority executive director Griff Lynch said in September he expects volumes to soften. Port of Los Angeles executive director Gene Seroka echoed that view when he announced the port’s August imports figures, which came in at an eight-year low.

Data from ports and Lloyd’s List Intelligence suggests that vessel backlogs are easing in most major ports on the east and US Gulf coasts. The number of boxships at anchorages is down to about 70, a decrease of more than 25% from early September.

“The growth in U.S. import volume has run out of steam, especially for cargo from Asia,” said Hackett Associates founder Ben Hackett. “Recent cuts in carriers’ shipping capacity reflect falling demand for merchandise from well-stocked retailers even as consumers continue to spend.”

The closure of factories during China’s October Golden Week holiday coupled with the Chinese government’s continuing zero-Covid policy “have impacted production, reducing demand for shipping capacity from that side of the Pacific as well”, he added.

Source: Lloyds’ List

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Ocean carriers cut trans-Pac services as blank sailings fail to stem rate slide

Mediterranean Shipping Co. Maersk, and CMA CGM are cutting three trans-Pacific services in response to a sharp drop in import demand and spot ocean freight rates.

The service changes, which amount to one post-Panamax service and two Panamax services, are not major capacity cuts and are likely to do little to prop up freight rates. But the moves demonstrate how fast carriers are pulling capacity as rates approach or fall below break-even levels.

2M Alliance members MSC and Maersk said last week in separate statements that their jointly run Sequoia/TP3 post-Panamax service will be suspended because of “significantly reduced demand” in the trans-Pacific. The Sequoia/TP3 service offers about 14,000 TEU in weekly capacity from Ningbo and Shanghai to Los Angeles.

The service will be merged into 2M’s 13,600-TEU Jaguar/TP2 service that calls Long Beach, Maersk said. Sea-Intelligence Maritime Analysis said the last sailing on the Sequoia/TP3 service, which was introduced in 2016, will be on the MSC Savona, which is scheduled to arrive in Los Angeles on Oct. 5.

Maersk also said two standalone services into the US East and Gulf coasts would be merged into one. The TP28 service, which the carrier debuted in 2022, would be merged into the TP20 service, which debuted in 2021, as of the final sailing of the Merkur Archipelago from Vietnam’s Vung Tau port on Oct. 13.

Calls at the ports of Norfolk, Charleston, and Houston on both services will be dropped, with the TP20 only calling New York-New Jersey and Mobile, Maersk said. Origin ports on the TP20 will include Jakarta, Vung Tau, Shanghai, and Ningbo. Both services use Panamax-size vessels of about 5,000 TEU.

Maersk said that consolidating services would offer better transit times for shippers and increase berth availability. It added that “as soon as cargo demand recovers, we will bring capacity back through relaunching TP3, TP28, upgrading of other services, and/or sailing extra-loaders.”

Separately, CMA CGM ended its Golden Gate Bridge service, which called the ports of Oakland and Seattle, according to Sea-Intelligence. The last sailing of the service, which offered about 8,500 TEU in weekly capacity, was on the CMA CGM Medea, which is currently berthed at Seattle.

Outside of the major ocean carriers, smaller lines have also been pulling ships from the trans-Pacific. Independent carrier CULines has ended a trans-Pacific express service that it jointly ran with Shanghai Jin Jiang Shipping since July 2021, after closing its TPN service in August, maritime consultancy Alphaliner said in a report. CULines has a second trans-Pacific express service that it still operates, Alphaliner said.

October capacity unchanged from a year ago

The service changes follow a series of blank sailings that carriers have laid out for October in a bid to cut capacity, but that have failed to halt a slide in spot freight rates. Sea-Intelligence said that ocean carriers as of last Friday planned to blank 48 planned voyages during the month. In comparison, carriers had only planned to blank 12 October voyages six weeks earlier, Sea-Intelligence said.

Those blank sailings are doing little to prop up spot ocean freight rates, which have slid 10 percent weekly since mid-August, according to a research report from investment bank Jeffries. Spot rates into the US West Coast are now hovering at $2,400 per FEU, close to the level where ships are only seeing break-even results.

Sea-Intelligence said the service cuts have mostly affected the surge capacity that was brought into the trans-Pacific amid high spot rates. Even with the service cuts, carriers will still have 1.56 million TEU of vessel space deployed in the trans-Pacific during October, essentially flat with totals from last year.

“With the blank sailings announced thus far, the carriers have merely reduced capacity down to the same level as we saw last year,” Sea-Intelligence said. “The relevant issue is the magnitude of capacity operated in the trade, and blank sailings might well be counteracted by larger vessels, new services, and possibly extra-loaders.”

Source: JOC news