US Imports Expected to Remain Elevated Through October, Powered by Online Sales & PPE

Freight forwarders and logistics experts are now predicting that US imports will remain at elevated levels at least through October, fueled primarily by e-commerce fulfillment and a steady flow of personal protective equipment (PPE).

Non-vessel operating common carriers (NVOs) told the Journal of Commerce (JOC) last week that the continued surge in imports will push the already record-high spot rates in the eastbound trans-Pacific even higher. As of Aug. 28, the Asia–US West Coast rate reached $3,639 per FEU, up 5.8 percent from the previous week’s record high and 125.3 percent from the same week in 2019, according to the Shanghai Containerized Freight Index (SCFI). The rate from China to the US East Coast stood at $4,207 per FEU, up 6.4 percent from last week and 56.3 percent year over year.

Earlier this month, NVOs were predicting that the import surge that began in late June would last at least through September. Now they are extending that timeline, based on continued growth in e-commerce fulfillment, as shoppers favor online shopping during the COVID-19 crisis. PPE shipments, which contributed to the surge in July, remain strong due to large-volume purchases by federal and state governments, he said.

However, e-commerce fulfillment is also playing an important role in the import surge. Consumers are shopping online for a broad range of merchandise, more than replacing the weakness in in-store purchases due to COVID-19. Analysts say the growing role of e-commerce imports could be changing the timing of peak-season shipping patterns in the eastbound trans-Pacific. 

NVOs do not have a clear view of demand beyond October, but purchase orders placed with factories in China may point to the strength in US imports continuing until the end of the year.

US imports from Southeast Asia, especially Vietnam, continue to set records. Nerijus Poskus, global head of ocean freight at Flexport, told a webcast Wednesday that imports from Vietnam in July were up 39 percent from June. July was the best month ever for imports from Vietnam through the West Coast, he said. In order to meet growing demand for premium services from Vietnam, APL Logistics next week will add Haiphong to the list of Asian ports served by its OceanGuaranteed product, which already included Ho Chi Minh City. Two of the tightest trade lanes in Asia in terms of vessel capacity are Ho Chi Minh and Yantian, China, to Los Angeles and Long Beach.

The SCFI reading also indicated that demand for all-water services from Asia to the East Coast is increasing. Normally, the difference between the East Coast and West Coast rate is close to $1,000 per FEU. However, that gap closed considerably in July as retailers concentrated their imports through the ports of Los Angeles and Long Beach. Imports through the Southern California gateway increased 33.8 percent in July from June, whereas total US imports in July increased only 0.9 percent month over month, according to PIERS.

The East Coast spot rate on July 31 was $3,495 per FEU, or only $328 per FEU higher than the $3,167 rate to the West Coast. On Friday, the differential had increased to $568 per FEU, according to the SCFI.

Port Logistics Group, which has distribution warehouses on both coasts, said the East Coast facilities are increasingly busy.“Southern California has always been number one, but we’re seeing high demand all around the country,” said Scott Weiss, vice president of business development at Port Logistics Group. He said the company’s warehouses serving Savannah are especially busy.

Source: Journal of Commerce