China-US trade truce is no trans-Pacific savior

“The new agreement, with details still sketchy at the moment, will do little to boost eastbound trans-Pacific container volumes in the short run,” concluded the container shipping analyst.

The Dec. 13 deal saw the suspension of planned 15% U.S. tariffs on $160 billion of imports from China that were set to take effect on Dec. 15. The U.S. also pledged that existing 15% tariffs on $112 billion of goods that took effect on Sept. 1 would be reduced to 7.5%.

For its part, China canceled retaliatory tariffs on U.S. imports, and the country is expected to increase purchases of U.S. products and services by some $200 billion over the next two years.

However, as Alphaliner notes, the 25% tariff imposed by the U.S. on some $250 billion of Chinese imports remains unchanged.

As a result, the eastbound trans-Pacific trade is still expected to record its first annual decline since 2009, with full-year U.S. container imports from the Far East expected to shrink by 2.4% to 15.7 million twenty-foot equivalent units (TEUs) this year, compared to 16.1 million TEUs in 2018, according to Alphaliner.

Rolf Habben Jansen, chief executive officer of container shipping giant Hapag-Lloyd, told FreightWaves that as a result of the U.S.-China trade war, volumes from China to the U.S. had “definitely come down” this year. However, the carrier has seen “markets like Vietnam, Indonesia and especially India to the U.S. develop very well.”

Picking up this point using numbers from PIERS, Alphaliner estimates that U.S. containerized imports from China decreased by 8.2% in the first 11 months of the year and China’s share of total imports from the Far East shrunk from 69% last year to 64%.

By contrast, U.S. imports from other Far East origins increased by 15.4%, with gains across all countries except Hong Kong.

“This was, however, insufficient to forestall an overall decline in trans-Pacific volumes,” said Alphaliner. “The shift in sourcing from China to Southeast Asia is apparent: Vietnam, Malaysia, Thailand and Indonesia all recorded strong double-digit growth.”

The new U.S.-China trade deal, concluded Alphaliner, will not be sufficient to reverse the shift.

“China is not expected to regain its former share of trans-Pacific volumes in the near term, while considerable uncertainty remains on prospects for overall growth of trans-Pacific volumes in 2020,” it added.

More FreightWaves and American Shipper articles by Mike