Like a pendulum that reached its maximum height in one direction that has begun to accelerate towards equilibrium, volumes of empty containers are shifting to the East Coast over the past few weeks.
The number of empty containers moving into the Elizabeth New Jersey market over the past two weeks has almost tripled, while inbound empties moving to the Los Angeles market has dropped 46%. Pair that with the fact outbound Los Angeles trucking volumes have dropped approximately 14% since the start of November, it seems the country’s capacity is in need of re-balancing. The question to ask is whether this is a proactive or reactive move to import behaviors by the large shipping companies and what does this mean for domestic freight.
The impact of the U.S. trade war with China has been discussed ad nauseum to this point, so it would seem the international shipping companies, who own the most of the 20 and 40-foot containers in the world, have already figured out shippers have begun to ship more freight to the East Coast from Asia. Domestic 53-foot containers have also been increasingly re-positioned to the Northeast over the past several weeks.
Many shippers have started sourcing production in southern Asia versus China to avoid additional tariffs. Shipping from southern Asia directly to the U.S. East Coast via ship becomes more attractive to freight destined for the major population centers in the eastern half of the U.S. Shippers can shave a few days on the water and a few dollars when shipping through the Suez Canal in the Middle East versus the Panama Canal from China.
This behavior has been emerging since the beginning of the year. Looking at a relative chart of the number of shipments originating from Vietnam versus China, volume growth has outpaced Chinese imports by over 50% at times during the second half of the year. Chinese import volumes still dwarf those from southern Asia, but there is enough change in behavior to warrant attention.