In the United States, the period between Labor Day in early September and Christmas in late December is usually the peak season for shipping goods, but this year things are very different.
According to One Shipping: California ports, which have attracted complaints from traders because of container backlogs in previous years, are not busy this year, and the usual container backlogs in autumn and winter have not appeared.
The number of ships waiting to be unloaded at the ports of Los Angeles and Long Beach in southern California has fallen from a peak of 109 in January to just four this week.
According to Descartes Datamyne, the data analysis Group of Descartes Systems Group, a supply-chain software company, container imports into the US fell 11 per cent in September from a year earlier and 12.4 per cent from the previous month
Shipping companies are cancelling 26 to 31 per cent of their trans-Pacific routes in the coming weeks, according to Sea-Intelligence.
The decline in freighters is also reflected in a sharp drop in transport prices. In September 2021, the average cost of shipping a container from Asia to the West Coast of the United States was more than $20,000. Last week, the average cost on the route fell 84 percent from a year earlier to $2,720.
September is usually the start of the busy season at U.S. ports, but the number of imported containers at the Port of Los Angeles this month, compared with the past decade, was only higher than during the 2009 U.S. financial crisis.
The collapse in the number of imported containers has also spread to domestic road and rail freight.
The U.S. truck-freight index has fallen to $1.78 a mile, just three cents higher than it was during the financial crisis in 2009. Jpmorgan estimates that trucking companies can break even at $1.33 to $1.75 a mile. In other words, if the price were to drop any further, trucking companies would have to haul goods at a loss, which would obviously make the situation worse. Some analysts believe that this means that the entire American trucking industry will face a shakeout, and many transportation companies will have to exit the market in this round of depression.
To make matters worse, in the current global situation, more and more countries are warming up together rather than relying on global supply chains. That makes life harder for shipping companies with very large vessels. Because these ships are very expensive to maintain, but now they are often unable to fill the cargo, the utilization rate is very low. Like the Airbus A380, the biggest passenger jet was initially seen as the saviour of the industry, but later found it was not as popular as medium-sized, more fuel-efficient planes that could take off and land more destinations.
The changes at West Coast ports reflect a collapse in US imports. It remains to be seen, however, whether the sharp drop in imports will help reduce America’s trade deficit.
Some analysts say that the sharp decline in U.S. imports means that a U.S. recession may be coming. Zero Hedge, a financial blog, thinks the economy will be weak for a long time.
Post time: Nov-01-2022