As a logistician or shipper, you need to remain up-to-date on logistics news. You need a go-to source that you can rely on. You should trust O’Neill Logistics as your source for logistics news! Subscribe now to receive trending logistics news every week! Additionally, share important logistics news with your colleagues and friends! You won’t regret it!
Trans-Pac blank sailings accelerate as demand weakens
US demand for imports from Asia is declining and retailers are correcting inventory. Additionally, retailers fear an economic recession will hit next year. Therefore, Trans-Pacific carriers are rapidly accelerating the number of blank sailings.
Over the past two weeks, carriers have announced 50 additional blank sailings on the trans-Pacific. The new blank sailings cover the last 10 weeks of 2022. As of November 4th, carriers were blanking 446,756 TEU of capacity for November to the US East and West coasts. Carriers are projected to blank 212,913 TEU on the eastbound trans-Pacific in December.
Carriers may announce further canceled sailings next month if bookings at Asian load ports are disappointing for the pre-Lunar New Year rush of imports. The rush normally comes right before factories close for the annual holiday.
US imports collapsed in September and October. Therefore, carriers began to increase blanked sailings. Additionally, carriers are announcing more blanked sailings every couple of weeks in a bid to stop or at least slow the decline in spot rates.
The spot rate for shipping a 40-foot container from Shanghai to LA last week was $2,364. This is a 2% decrease from the previous week and a 76% increase from the same week in 2021. The Shanghai to NY spot rate was $5,694 per FEU. This was a 6% decrease from the previous week and a 55% increase YoY.
Future Outlook
Beyond the next eight weeks, carriers are waiting to decide how much capacity to deploy through January. The month leading up to the Lunar New Year factory closures in Asia normally sees a spike in imports. The factories usually close for a week or two.
Sea-Intelligence said, “The carriers have clearly not taken any decisions as to how they want to approach the potential pre-Chinese New Year rush.” It appears more to be a wait-and-see approach in terms of whether there will be a seasonal demand spike or not.”
US retailers lower import forecast amid demand decline
US retailers significantly downgraded their forecast for US imports over the next several months. They believe that consumers will remain cautious in their buying habits at least through Q1 2023.
Ben Hackett said, “We expect the flattening of demand that began around the middle of this year to continue into the first half of 2023. This will depress the volume of imports, which has already declined in recent months. Carriers have begun to pull services and are looking at laying up ships.”
Retailers believe that containerized imports into the US this month will decrease 9.2% YoY. Imports are expected to drop 9% YoY in December. Additionally, imports are forecasted to be down 8.4% YoY in January. Imports are projected to drop 19.1% YoY in February. The GPT forecasted a year-over-year decline of 15.2 percent for March imports.
October figures have not been reported yet. However, GPT expects that imports will decrease 8.5% YoY to 2.02 million TEU. The GPT gather data by surveying 12 US ports.
Holiday spending to grow
Retailers have faced headwinds such as inflation and high interest rates. However, consumers are expected to spend freely during the holiday season. The NRF recently conducted its annual holiday sales forecast. The forecast said retail sales should grow between 6% and 8% in September and October compared to 2021. 2021 was a record holiday season for retailers.
However, the merchandise that retailers will sell has long since entered US ports. The NRF said, “Cargo levels that historically peak in the fall peaked in the spring this year as retailers concerned about port congestion, port and labor negotiations, and other supply chain issues stocked up far in advance of the holidays.”
GPT forecasts that US imports in 2022 will be flat with 2021. Imports in the first half of the year increased 5.5% over the same period last year. However, imports are expected to decline 5.3% in the second half of the year.
About O’Neill Logistics
O’Neill Logistics is a leading third party logistics provider. We operate in California, Savannah, New Jersey. We service many verticals including Garments, Fashion Accessories, Footwear, Furniture, Home Goods, & Electronics. Additionally, we offer omni-channel distribution and all value-added services. Lastly, we focus on retail “drop shipment” fulfillment and item-level fulfillment services with same-day service offerings.
O’Neill Logistics has over 2 million square feet of state-of-the-art facilities. Additionally, we offer dray services to support the warehouses and provide distribution to retailers and wholesalers. Our reliable 3PL platform combines sophisticated technology with robust, flexible processing designs and speed-to-market gateway models.
Lastly, we aim to simplify your supply chain. We deliver exceptional service and can optimize your operational performance. Therefore, we aim to build, protect and foster strong business partnerships.
Please reach out to us if you have any questions or need assistance with your logistics solutions!
