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Sept.21, 2015

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18 THE JOURNAL OF COMMERCE SEPTEMBER 21.2015 CONTAINER SHIPPING SPECIAL REPORT IT MAY NOT look much like the busi- est time of the year for containerized imports, but shippers and carriers insist there will be a peak shipping sea- son this year. It will just be later than normal, in October and November. "The overall feeling we're getting is that importers are more effective and precise in their cargo planning. They can wait longer to bring the cargo in," said Niels Erich, a spokes - man for the Transpacific Stabilization Agreement, a discussion group of 15 of the largest carriers in the eastbound Pacific. Julie Hughes, president of the U.S. Fashion Industry Association, told The Journal of Commerce this sum- mer that July apparel imports are no longer an indicator of what imports will look like during the peak season. Imports could be strong in late Sep- tember and October, she said. Toy importers likewise indicate that the modest increase in imports this summer compared to 2014 doesn't necessarily mean peak-season 2015 will be a bust. Imports are down slightly compared to the summer of 2014, but importers last year pulled a lot of product forward to hedge against potential problems at West Coast ports during the longshore con- tract negotiations, said Dave Akers, managing director of the Toy Shippers Association. Akers also indicated that slumping freight rates from Asia to the West and East coasts in August and early Sep- tember could be saying more about excess capacity in the eastbound Pacific than about normal seasonal container volumes. Retailers and other merchandise importers shifted cargo to the East Coast this past year because of port congestion resulting from Interna- tional Longshore and Warehouse Union slowdowns and retaliation by the Pacific Maritime Association in restricting costly night and weekend work during lengthy and contentious contract negotiations. The West Coast's share of contain- erized imports dropped to 50 percent in the first half of this year, from 55 per- cent a year earlier, and the East Coast's share increased to 43 percent from 40 percent, according to PIERS, a sister product of The Journal of Commerce within IHS. Carriers, how- ever, responded to strong demand for East Coast services through the Panama and Suez canals by adding six weekly services in the spring, so capacity exceeded demand even in the growing all-water trades to the East Coast. Following a disastrous January and February, West Coast volumes have been recovering. According to Pacif ic Ma ritime Association numbers tracking loaded import con- tainers through West Coast ports, the 5,684,554 20-foot container units handled in the first seven months of 2015 were down only 1 percent from the same period last year. In July, the most recent month for which the PMA has statistics, containerized imports increased 5 percent year-over-year year and 4 percent over July 2013, which was a more normal year with- out ILWU negotiations. The relatively st rong impor t numbers in July shed light on another development: Because of the strong dollar, the price of imports from Asia has fallen, trucking and warehouse companies suggest. They report that warehouse space in Southern Cali- fornia is tight, indicating that direct importers have been bringing mer- chandise into the country all summer and storing it in warehouses wait- ing for retailers to order the goods to their stores. In other words, retailers are pushing the inventory-carrying costs on to importers, who are able to absorb the added storage costs because the price of the products has come down. Even if imports increase in Octo- ber, freight rates may rise for only a short period, and probably won't approach last year's much-higher lev- els. It would take an unusually strong spike in volume to negate the overca- pacity plaguing carriers. Importers may experience a few weeks where it's difficult to book space on eastbound vessels, but a severe capacity crunch and rolling, or delaying, of cargo to subsequent voyages doesn't appear to be in the cards this year. In Asia-Europe, Russia's mal- aise has deprived the trade of any meaningful peak season, according to Drewry. Admittedly, the London- based research and consulting firm said, seasonal cargoes such as toys and Christmas decorations to North Europe as a whole had compensated for the loss of Russian traffic, but some forwarders are reporting lower gar- ment and electronic parts volumes compared to last year. Shippers and carriers expect a peak season to arrive in the fall, but a sustainable jump in rates is unlikely By Bill Mongelluzzo and Greg Knowler DEPLOYED CAPACITY, IN FACT, WAS MARGINALLY LOWER IN THE SECOND QUARTER THAN IN THE FIRST.

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