Features
Will China Trade Volumes Rebound?

Exports are up and imports are down—and it's likely to remain that way for a while

by Richard Knee

U.S. companies importing goods from China have a problem with the annual surcharge that shipping lines plan to tack on during the summer-autumn peak season — namely, that there is no peak season this year. And the carriers admit it.

Export volumes, meanwhile, have reportedly continued rising as the dollar’s decline against other currencies makes U.S. goods more affordable, and finding containers for outbound goods remains difficult.

Even with some importers bringing goods in early in anticipation of factory closures in China for a six-week span before, during and after the Olympic Games slated in China, the U.S. economic slump has reportedly pulled import volumes down.

“Customers that usually ship eight to 10 containers a month are down to two or three containers,” said Don Simon, logistics director at Coppersmith Inc., a freight services firm based in El Segundo, Calif.

Identifying reasons behind slump

“Eastbound volume from China to the U.S. has so far declined by 10+ percent, on a year-on-year basis,” says Osamu Suzuki, who has held the titles of president, CEO and chairman of MOL America.

“This is partly because of bad weather in central and south China earlier this year, and the U.S. recession, which has caused a declining demand for furniture and home-improvement goods. Even so, the U.S. will continue to rely heavily on import goods from China since there is no other country capable of satisfying the appetite of the U.S. consumer in terms of both quantity and quality.”

Forecasting a rebound

Suzuki says import volumes from China will rebound once U.S. retailers gain confidence in consumer behavior.

Dana Magliola, a spokesman at Maersk’s North America headquarters, says, “The fortunes of the import market will depend on the strength of the American economy. If the current recession is prolonged, 2009 is likely to post a very sluggish growth at best. Export growth will depend on the commodities boom and continued appreciation of the euro — Europe is an alternate sourcing market for Asia — against the U.S. dollar.”

Little Olympics effect

Mike Zampa, a spokesman at the North American headquarters of APL Ltd., the Singapore-based shipping line, says the Asia-to-U.S. volume is “fairly flat,” while westbound traffic is “generally strong,” though the latter is not necessarily “China-driven.”

“Cargo is headed to an assortment of locations. … We’re seeing more of an uptick from buyers in Japan, Korea and to some extent India,” Zampa says. “I don’t think any of this is related to the Olympics. There has been some impact on dangerous and hazardous traffic, and there are currently embargoes on this kind of freight moving through China’s ports. But the areas where the Olympics will be taking place is largely home to manufacturers of bulk items such as steel and coal products, which are not having an effect on containerized traffic.”

Suzuki says he foresees no substantial change in volumes after the Olympic Games. In fact, he says, “If inflation occurs after the games similar to what other host countries have experienced, China will try to import more, especially food-related items, to restrain inflation.”