By Greg Miller of FreightWaves.com,
China-U.S. West Coast container rates continue their astonishing climb. Not because of too little vessel supply, but because of too much import demand. U.S. import demand that is not surging despite of coronavirus, but because of it.
“The trans-Pacific eastbound market is going crazy,” exclaimed Nerijus Poskus, vice president and global head of ocean freight at digital freight forwarder Flexport. Current dynamics are unprecedented, he said in an interview with FreightWaves on Wednesday.
“All of us thought that because of the pandemic, consumption would go down,” he said. Instead, it has gone up — at least temporarily.
Import demand: upside surprise
“Our clients are selling more. They’re selling more online. And that’s why they’re shipping more into the U.S. Of the top 100 clients of Flexport, 80% of them are growing year-on-year and assumedly they’re gaining market share,” reported Poskus.
“People are still buying. Even unemployed people. They’re getting government support so they still have money. They’re no longer spending on restaurants, haircuts, gas and commuting. But they have the cash so they’re just buying more things. And they’re buying more things online.
“There are also many people leaving the cities, myself included. So, for example, I had to buy a lawnmower and all of the kinds of things for the home that I didn’t need in the city. I believe there are many people like me.”
Shippers are importing more bikes, camping equipment, household items and exercise machines to the U.S. than before, he noted.
As far as furniture, he said, “Old-school furniture companies that aren’t selling online aren’t doing well. Those that are more innovative and selling online are doing better. Shops like IKEA are selling out.”
More personal protective equipment (PPE) is also coming in. “We are seeing a second wave of PPE,” confirmed Poskus. “I would say anywhere between 5-10% [of volume] is PPE. Not just masks. All kinds of protective equipment.”
Asked why shippers are favoring voyages from Asia to the West Coast versus the East Coast, he replied: “Transit time and e-commerce. It’s so much faster.