Chart of the Week: US Customs Shipments – Los Angeles, Outbound International Rail Carloads – Los Angeles to Chicago, Outbound Tender Volume Index – West Region SONAR: CSTM.LAX, ORAILINT.LAXCHI, OTVI.URWT
Maritime, rail, and trucking volumes all declined sharply around West Coast at the end of October for yet another distressing signal leading into the holiday season, but is this really a reason for concern?
According to FreightWaves customs shipment data, imports declined sharply to the ports of L.A. and Long Beach after October 21 to a point 34% lower on November 2.
Rail volumes for 20, 40, and 45-foot containers, those used traditionally for international shipping, followed shortly thereafter in the nation’s largest lane by volume, L.A. to Chicago. Rail volumes of the international containers fell by over 30% from October 24 to November 4 in that lane. Domestic style containers, 48 and 53-foot, also declined 33% in the same timeframe.
Next up was trucking, with outbound L.A. volumes falling 14% from October 28 to November 4, according to FreightWaves proprietary Outbound Tender Volume Index (OTVI) for the L.A. market. The L.A. market is the nation’s fifth largest market by outbound volume, accounting for 2.86% of total loads in the U.S. as of November 9.
It is typical to see import volumes decline to the western ports this time of year due to shippers’ preferring to ship to the east coast to decrease the distance to the destination. The Chinese Golden Week that occurs around Chinese National Day, the anniversary of the founding of the People’s Republic of China on October 1 in 1949, in the first week of October this year is also a contributing factor.
The week is characterized by factory shutdowns and dramatic declines in production which have a delayed impact on import volumes into the U.S. A similar and more dramatic holiday period occurs in the winter months around Chinese New Year, which results in steep declines of maritime shipments entering the U.S. This past year shipment volumes dropped 30% from February to March as a result.
Comparison to 2018
To put things in perspective, import volumes declined 32% from October 23 to November 2 last year to the ports of L.A. and Long Beach, a similar decline to this year. However, shipments averaged almost 9% lower this year versus 2018 during the same period, indicating there is a general contraction in the seasonal decline.
Rail volumes in the L.A. to Chicago lane display a similar y/y decline, but trucking volumes do not. Outbound L.A. volumes were up 15% y/y on November 2, an indication that rail is much more closely tied to import volumes than trucking, or at least that was the case in 2018.
The recent trade war with China has altered many supply chains across the globe. Many shippers have shifted their behavior around newly implemented tariffs to escape additional costs and uncertainty. Much of the domestic freight activity in 2019 has centered around shippers changing behaviors.
Most of the large port cities have experienced y/y growth in trucking volumes. From February through September outbound L.A. truckload volumes averaged 48% higher y/y. Elizabeth, NJ market volumes, the home of the port of New York/New Jersey, have averaged 38% higher from May through September. The Savannah, GA market averaged over 45% higher during the same five-month period.
At least some of the decline can be explained by the shifting shipper preference to the east coast both seasonally and cyclically. But total import shipments were down 8% in October, further supporting the idea that the elevated import activity is diminishing.
A big holiday season may be just what the economy and transportation providers need to get things moving again.
Be sure to thank a veteran this week for their service. Happy Veterans Day and a special thanks to all those who have served.
About the Chart of the Week
The FreightWaves Chart of the Week is a chart selection from SONAR that provides an interesting data point to describe the state of the freight markets. A chart is chosen from thousands of potential charts on SONAR to help participants visualize the freight market in real-time. Each week a Market Expert will post a chart, along with commentary live on the front-page. After that, the Chart of the Week will be archived on FreightWaves.com for future reference.
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