DAT Freight & Analytics has been studying recent consumer trends, and even though there is still a lot of uncertainty around the pace and duration of the economic recovery, our best estimate for the freight market is the first six months of this year could look a lot like the last six months of 2020 with one exception – Chinese New Year.
For most Americans, Chinese New Year (CNY) is rarely noticed unless, of course, you’re in the freight business, where it’s the equivalent of the U.S. Christmas holiday shipping season.
Each year, more than a billion people in China and millions around the world celebrate the Lunar New Year, which marks the end of the coldest days. There’s no set date for CNY, and this year it’s almost three weeks later than 2020, which has significant implications across the supply chain.
Why? CNY is China’s longest holiday and causes the largest human migration in the world, as everyone heads back home to celebrate. With most elderly parents in China living in rural villages and their children working in cities, the week-long CNY celebration allows for workers to travel home the week prior and then return to work after.
For U.S. importers, this means a number of countries in Asia close down their manufacturing plants, which in part explains the massive surge of imports we’re been seeing. According to global import data from PIERS, 87% of loaded import containers came from Asia in December – 50% coming from mainland China and Taiwan alone.
To avoid the massive inventory failures retailers experienced last Spring during the pantry stocking phase of the pandemic, shippers this year are putting their Spring and Summer orders on fast forward to make sure they’re either loaded onto a vessel or in the U.S. before CNY begins.
The most recent Global Port Tracker report released by the National Retail Federation (NRF) expects imports in 2021 to surpass records set in 2020, despite the coronavirus pandemic. “Nobody would have thought last spring that 2020 would be a record year for imports, but it was clearly an unpredictable year,” according to Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy.
December’s import data from the IHS Markit PIERS database shows that the volume of loaded containers reaching the U.S. increased by 22% year-over-year in December, with furniture and fixtures the number one commodity at around 15% of all loaded container imports. Not surprisingly, furniture and curtains/linen volumes are up 35% and 32% y/y, respectively, as a result of more consumers working, eating, sleeping, exercising and schooling at home during the pandemic.
Bicycles and related parts are up 70% y/y, while footwear and automotive tires are down 24% and 21% y/y, respectively, both consistent with U.S. mobility data, which reports an 18% decrease in population movement outside the home compared to pre-pandemic levels.
Of course this just compounds a worsening situation on the West Coast where according to Gene Seroka, executive director at the Port of Los Angeles, “We are all stretched very thin, whether it’s warehouse workers, truck drivers or longshore workers,” he said. “Storage facilities are full and have staffing issues because of social distancing, and this extends to the trucking community and the docks.”
Latest data from the Port of Los Angeles Signal report estimates import TEU (twenty-foot equivalent unit) in week three will be 157,763, an increase of 80% y/y and a staggering 147% y/y increase estimated for week four.
In December, Californian ports unloaded around 27% of all loaded TEU imports in December, but due to rising port congestion, shippers have been diverting freight to other ports in the Pacific Northwest including, Seattle and Tacoma, WA, and further east to Gulf Coast ports. As a result, TEU loaded import volumes in Houston were up 28% y/y in December, up 25% y/y in Tampa, FL, and up 3% y/y in Mobile, AL.
For carriers and brokers this could mean surging volumes in freight markets that might not normally be on their radar as the pandemic rages on. Outbound load post volumes are currently up 56% m/m in Houston, up 54% m/m in Seattle, and up 12% m/m in Elizabeth, NJ, but are showing signs of slowing down now we’re past the holiday shipping season.