This week:
- The US Government will begin investigating unfair Chinese trade policies affecting steel and aluminum imports and manufacturing
- The Port of Portland has announced that it will cease its container services in October
- US freight and trucking demand remains low
- Westbound imports on the trans-Atlantic returned to pre-pandemic levels in Q1
- The Port of Los Angeles reported its eighth consecutive month of year-over-year volume gains
Federal Administration Calls to Triple Tariffs on Imported Steel and Aluminum from China
Following concerns that unfair trade practices from the Chinese government are impacting the US steel and aluminum industries, the federal government has called for the United States Trade Representative (USTR) to triple existing tariffs.
Under Section 301, the existing tariff rate for imported Chinese aluminum and steel is 7.5%. The call for the USTR to triple tariffs comes after five labor unions outlined their concerns about unfair practices in a petition to the USTR. One of the key points was that imported, high-emission steel and aluminum from China was flooding the market at below-market cost, making it impossible for US manufacturers to compete.
The petition also asked the federal government to investigate the Chinese government’s aggressive non-market policies and how these are affecting US shipbuilding. The government has launched a full investigation into China’s policies and unfair trade practices relating to shipbuilding and other maritime and logistics sectors.
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Portland Announces the End of Its Container Services in October
The Port of Portland has announced that it will no longer offer container shipping services at its Terminal 6 (T6) container terminal as of October 1. The decision was made due to increasing financial losses over the last four years that the local port authority can no longer absorb.
While T6’s financial losses in 2021 and 2022 were small enough, 2023 saw losses totaling $13.2 million, followed by losses totaling $13.7 million for 2024. From July 2023 to February this year, the port saw a 43% drop in container traffic, one of the main contributors to its financial deficits.
Portland had already cut its operating hours down to four days a week. However, without a third-party terminal operator to take over the lease, the port will not receive an $8 million state grant necessary to keep T6 open for the remainder of the year. T6’s continued operation also demands additional work, such as dredging and cleaning its Superfund site along the Willamette River.
US Freight Demand Remains Soft but Consistent
The latest Cass Freight Index, released on April 15, shows a freight market that is still missing a key catalyst to lift demand and freight volumes. While import volumes and domestic manufacturing are growing, neither has notably impacted trucking volumes and equipment overcapacity.
March saw an 18% year-over-year reduction in freight spending from shippers and is the 14th consecutive month of year-over-year declines in shipment volumes, albeit the lowest decline since April last year. Data from FTR Transportation Intelligence and Truckstop.com show that in the week ending April 12, truckload volumes on the spot market rose 10% year-over-year but were still 24% lower than the five-year average.
The US long-distance truckload producer price index (PPI) was almost flat for March, rising from 175.6 in February to 175.8. Measurements for all-inclusive truckload pricing last month were down 6.5% year-over-year, and 21.6% lower than in March 2022. Less-than-truckload (LTL) US PPI has seen a slight increase, rising 0.5% from February to March and 2.5% year-over-year.
According to Cass Freight, even if rates begin moving higher from here, as is increasingly likely, freight will very likely remain deflationary this year.
Q1 Trans-Atlantic Import Volumes Almost Reached Pre-Pandemic Levels
The first quarter of 2024 saw US demand for imports from Europe jump 10% year-over-year, pushing westbound cargo volumes on the trans-Atlantic close to 2019’s Q1 volumes.
Import volumes for Q1 this year from Europe totaled 928,232 TEUs, even though January saw a year-over-year decline of 5.9%. February volumes then jumped by 20.13%, while preliminary data from PIERS for March indicates a 17.3% increase year-over-year. As of April 12, westbound trans-Atlantic vessel utilization sits at approximately 75%.
Despite the sudden increase in spot rates on this trade lane, data from Xeneta shows that contract rates over the last four months are largely unchanged. Spot market prices in December averaged approximately $600/FEU, rising to just over $2,000/FEU in mid-April including origin and destination handling charges. This price difference also includes head haul rates of more than $400/FEU that carriers added to rates in February.
March Cargo Volumes Rise 19% YoY at the Port of Los Angeles
For eight consecutive months, loaded import volumes into the Port of Los Angeles and Long Beach have risen year-over-year. In March, loaded imports rose by 19% totaling 743,417 TEUs.
Exports out of Los Angeles have also seen year-over-year increases, with loaded exports totaling 144,718 TEUs and representing a 47% year-over-year rise. The port’s executive director Gene Seroka has stated in press conferences that while April is normally a slow month, the port still expects to process over 700,000 total TEUs for the month.
Estimates for high import volumes for the near future are also supported by the National Retail Federation (NRF). The NRF and Hackett Associates have forecast that the top 12 ports in the US will handle as much as 2 million TEUs in May.
Photo by Jacob Meissner on Unsplash
