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November 26 2018

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November 26 2018 | The Journal of Commerce 17 www.joc.com International Maritime of Commerce within IHS Markit. US imports were up 5.2 percent in the first nine months of the year, com- pared to the same period a year ago. The Global Port Tracker, pub- lished monthly by the National Retail Federation and Hackett Associates, projected imports will increase 4.3 percent in October, 2.3 percent in November, and 4 per- cent in December year over year. Cargo growth, plus declining ves- sel schedule reliability — 44.2 percent to the West Coast and 65 percent to the East Coast in the third quarter, according to SeaIntelligence Maritime Consulting — has scared importers into paying general rate increases (GRIs) and surcharges to secure vessel space. Carriers had pre-filed GRIs for Nov. 1 and also for Nov. 15. Projecting the medium-term and longer-term impact of several rounds of Trump administration tar- iffs this year has already begun. The general feeling in the trade is that cargo volumes and freight rates will soften in January, although the early Chinese New Year on Feb. 5 should prevent a crash. "Earlier indicators are there will be a drop-off despite Chinese New Year," Krause said. Thomas Knudsen, president of Toll Global Forwarding, told TPM Asia in October that the early part of 2019 will be "very quiet." Carriers as well as shippers have a great deal at stake if the US-China trade war continues into the new year. "If we see next year a massive impact from the US-China trade war, we will have to adjust our capacity in Asia. It's a major concern for us because China represents more than 40 percent of our turn- over," said Mathieu Girardin, vice president of CMA CGM. Carriers did, however, learn a lesson from their success this year in managing capacity to meet demand in the trans-Pacific, compared with the Asia-Europe trade, where this did not happen and where rates thus remained much weaker. "The trans-Pacific trade – the world's largest deep-sea market – is once again a money printing factory for carriers." according to Drewry Shipping Consultants. JOC email: bill.mongelluzzo@ihsmarkit.com twitter: @billmongelluzzo cepted too late. Late shipments are especially troublesome for apparel shippers, who are often on the hook when they do not meet deadlines from retailers, Wiesenmaier said. Most Christmas merchandise has already been landed by now in order to reach store shelves by the Nov. 23 beginning of the holiday shopping season, so continued front-loading of imports through December will involve spring goods and manufac- turing inputs. A significant level of front-loading of lawn and garden goods and patio furniture would likely result in a noticeable drop in cargo volumes and freight rates in January unless carriers engage in blank sailings or other capaci- ty-management strategies. "I don't expect there will be many ex- tra-loaders after Jan. 1," Kuo said. Import volume projection US imports in September in- creased 5.2 over the same period last year to 18 million TEU, according to PIERS, a sister product of The Journal almost to the end of December," a West Coast port executive said in ex- plaining the large increase in the East Coast spot rate. "All of this is based on demand," he said. Retailers and direct importers are taking no chances in guessing wheth- er the Trump administration will implement the 25 percent tariffs on $250 billion of hundreds of product classifications on Jan. 1. Although im- porters hope the tariffs will be called off or postponed when US President Donald Trump and Chinese President Xi Jinping plan to meet on Dec. 1 in Buenos Aires after the G-20 leaders summit, importers can't wait that long to decide when to ship, given lead times of well more than a month are involved in ordering, booking, and transporting shipments. Citing tariff impact and higher fuel prices, carriers individually and through vessel-sharing alliances sus- pended three weekly services to the West Coast in June, reducing total capacity about 6 percent; one service to the East Coast was suspended, reducing capacity 1.3 percent. That has led to a continuing inability to secure bookings, Wiesenmaier said earlier this month. "It is still quite confusing. It is not fluid; it's not reliable enough," he said at the 30th annual Apparel Importers Conference in New York. Containers are still being rolled in Asia, as has occurred since summer, and some bookings are being ac- "Importers continue to pump in cargo. They have to land it before Jan. 1" Shutterstock.com

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