From Ti's Americas email newsletter:
Evidence of an improving economy was noted as the Port of Los Angeles reported exceptionally strong January tonnage. For the month, total TEUs increased almost 6% with imports up 5.25% and exports up 5.9%. Reasons for this strong increase may be due to an increase in inventory restocking following a good holiday season and also probably because of an early Chinese New Year, when Asian manufacturing facilities close for about two weeks.
A strong beginning for the New Year from the largest US port but is it an anomaly? Apparently not, as according to Zepol Corporation, which tracks international trade, total US January ocean freight imports increased 5.8%. Strong growth in US ocean freight imports was reported in shipments originating from Europe, up 17.22% while shipments originating in Asia were up 5.57%.
As US ocean freight shipments appear to have a strong January showing, air cargo may not be as lucky. Although US airports have yet to report January tonnage, Frankfurt’s airport reported a 16.8% decline whereas the Asian airline, Cathay Pacific, reported a 19.5% decline in tonnage. Both airport and airline blamed soft markets and Asian production slowdown leading up to the Chinese New Year on the decline.
Additional insight into the US air cargo market may be gleaned from the US inbound airfreight index. For the month of January, rates declined 2.1% from December to January with inbound rates from Europe declining 2.5% and Asian rates declining 3.8%. This does not appear promising for the market. However, while US inbound air rates declined, the US outbound airfreight index noted only slight month to month declines in outbound rates to Europe and to Asia.
Why the strong growth in ocean freight versus air cargo? Perhaps one of the differences may be in the types of cargo that is carried. For example, the majority of the Port of Los Angeles exports are primarily made up of materials, including paper, paper board, waste paper as well as fabric, raw cottons, and grain and other agricultural products, and scrap metal. The over capacity within the ocean freight market may have led to even lower rates than those for air cargo. Lastly, demand from emerging markets may also have resulted in the increased ocean freight movements.
Still, the impressive amount of exports reported by the Port of Los Angeles along with only slight declines in US air cargo outbound rates indicate that demand for US exports continued during the month of January. However, commentary from both the ocean freight and air cargo industries indicate February may be a weak month because of the early Chinese New Year.