Commentary Trading Places

By Peter Tirschwell

Sources say their total 2024 volume expectations have not changed , only the timing .

With new capacity entering bellwether markets like the trans-Pacific , stalling the meteoric rise in spot rates since April , the “ million-dollar question ” headed into the remainder of the year , according to one freight forwarder , is whether the first-half volume surge has legs .

If it does , it means continued tightness of capacity , lofty rate levels , difficulties obtaining allocations and ongoing congestion at Asian hub ports extending deep into 2024 . If it doesn ’ t , the market will soon cool down , if that hasn ’ t started already , and enter yet another normalization phase that will send rates and carrier profits tumbling while easing disruption .

Key to that question is whether the first-half volume growth was primarily a result of robust underlying demand or rather logistics decisions by skittish shippers to advance the peak season in the face of second-half risk like a dockworker strike on the US East and Gulf coasts , unwinding and rebuilding of alliances , or the trade impact of a potential second Trump presidency .

Some analysts , as well as some large US importers that spoke with the Journal of Commerce in recent weeks , believe logistics considerations are the main drivers . That presumes the market will steadily cool off as the year progresses . The sources said their total 2024 volume expectations had not changed , only the timing .

“ We see the volume surge as being a logistics rather than economics issue ,” said Chris Rogers , head of supply chain research for S & P Global Market Intelligence . “ That means the volume

US import boom expected to slow in late 2024

Year-over-year change in containerized US imports , actual and forecast

15 %

10 %

-105 %

0 %

-5 %

-8% -10%

Q1 2024 Q3 2024 L Q1 2025 Q3 2025

Notes : As of June 2024 Source : S & P Global Market Intelligence

Total China Other Asia Europe

Q4 2025

© 2024 S & P Global

L surge seen thus far this year is more due to front-loading of shipments for restocking and risk avoidance versus underlying demand .

“ The Red Sea disruptions , transshipment congestion and volatile rates are all evidence of an artificial demand surge running up against limitations in capacity ,” he added . “ Weak manufacturing and retail data suggest demand-side pressures are minimal .”

Rogers said after a robust first half , seaborne imports into the US market from all major regions will likely slow in the second half and into 2025 .

Industry analysts agree there has been much frontloading in the market seen over the past few months .

“ This year , peak season appears to have moved up a few months as importers deal with space issues and uncertainty ,” analyst Jon Monroe wrote in a recent newsletter .

Total containerized US imports grew an average of 13 % per month on a year-over-year basis in the first quarter but slowed to an average of 8.6 % in April and May , according to PIERS , a sister product of the Journal of Commerce within S & P Global . Import growth for the next five quarters will flatline to roughly 5 % through 2025 , according to S & P Global forecasts .

Some ocean carriers told the Journal of Commerce the slowdown was due more to port congestion in Asia and resulting capacity constraints and that vessels during those months sailed fully while rates continued to surge . They said pent up demand will carry the market tightness into the second half with easing only occurring after the end of the traditional trans-Pacific peak season .

email : peter . tirschwell @ spglobal . com

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46 Journal of Commerce | July 29 , 2024 www . joc . com