Coronavirus pushes US importers to non-Chinese Asian sources

As the coronavirus fallout deepens, all eyes are on the China-to-U.S. trans-Pacific route.[1] According to Eytan Buchman, chief marketing officer of Freightos, "Many provinces and cities in China have extended the [Chinese New Year holiday] shutdown, some even until March 1. Highway and transportation closures, and mandatory 14-day quarantines for people returning home from strongly affected areas, mean that even in places no longer shut down, the return to normal at factories and ports will be slow.[2]

"In terms of rates, with minimal manufacturing and cargo to ship, demand has dipped below what was expected for post-Chinese New Year," said Buchman, who noted that Chinese-U.S. rates "have so far remained unchanged from their pre-holiday and pre-outbreak levels." He believes China-U.S. rates "may start to fall ... in the short term as the shutdown drags on," but when "production does pick up in full force -- possibly not until mid-March -- the spiking demand and reduced number of ships in the region will push freight prices up." Freightos provides an index[3] (SONAR: FBDXD.CNAW[4]) that tracks the daily change in the price to ship a forty-foot equivalent unit (FEU) container from China to West Coast ports such as Los Angeles and Long Beach.

Looking at this index over a three-year period, the current rate is just under £1,500/FEU, roughly the same level it was two years ago.

The outlier in the three-year data series is the period from August 2018 to February 2019, when rates were artificially elevated as U.S. importers brought cargoes forward to beat real or perceived tariff deadlines.[5]

While not seen in the trans-Pacific rates, the coronavirus effect is being felt in Asian sourcing markets, according to Freightos.

Buchman said, "Freightos.com's[6] marketplace data suggest that among U.S. importers, coronavirus has intensified a trend that was started by the trade war: Importers are increasingly looking for regional suppliers other than China.[7] The share of searches for countries other than China has climbed to more than 17% so far this month, up from less than 8% a year ago."

Coronavirus pushes US importers to non-Chinese Asian sourcesChart credit: Freightos

References

  1. ^ all eyes are on the China-to-U.S. trans-Pacific route. (www.freightwaves.com)
  2. ^ the return to normal at factories and ports will be slow. (www.freightwaves.com)
  3. ^ Freightos provides an index (fbx.freightos.com)
  4. ^ SONAR: FBDXD.CNAW (sonar.surf)
  5. ^ when rates were artificially elevated as U.S. importers brought cargoes forward to beat real or perceived tariff deadlines. (www.freightwaves.com)
  6. ^ Freightos.com's (www.freightos.com)
  7. ^ Importers are increasingly looking for regional suppliers other than China. (www.freightwaves.com)

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