Freight and Container Shipping from Asia to the United States

Posted on Saturday, February 27th by

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The activity of the freight shipping industry is conditioned by a wide range of factors, from the proper activity of ports to the evolution of the rates set by freight shipping companies to the activity of various important economic powers around the world. A closer look at the relevant numbers will reveal that the waters have been quite stormy in the US freight shipping area lately and the storm has not passed just yet. Some developing markets have reached a period of stagnation, the demand in some highly active areas has decreased and the price of crude oil has been fluctuating. The Transpacific Partnership agreement has not produced any notable results up to the present moment either, in a context where political issues arise on a constant basis. However, these results are expected to come, starting with an increased volume of imports from Vietnam over the next few years. Here are some of the prospects on the evolution of the freight and container shipping activity from Asia to the United States in the immediate future.

For starters, one of the main aspects experts have pointed out in this context is the fluctuating nature of the freight shipping rates, which is expected to persist. According to the latest statistical data, they are expected to follow the recent trend and drop further over the next few months, in the context of an increased slot capacity of containers and an expansion of the global container fleet, with an almost insignificant number of deletions due to scrapping, registered conversions or casualties. It should be noted that the average container shipping rates for shipments initiated from ports of origin in China have dropped by 32 per cent due to imbalances in supply and demand. Moreover, the teu capacity has been increased to unprecedented levels while the global container fleet has been expanded. In fact, these improvements have been made much more promptly than required by the increases in demand. Let us note the addition of mega vessels as well, their particular contribution to the development of a much more efficient shipping industry being expected to reveal itself little by little in the immediate future.

Another prediction made by experts in the field involves a revised organisational structure as far as steamship alliances are concerned. This particular prediction has come as a result to takeovers and fusions among container shipping companies becoming increasingly common in a legal context that has proven rather flexible and permissive.

Also, in the context of fluctuating fixed freight shipping rates and intense debate going on with regard to their benefits to various participants in the shipping industry, it comes as no surprise that they make the object of expert predictions as well. However, these predictions on the future evolution of fixed freight shipping rates within the shipping industry tend to be unfavourable, at least as far as small and medium size importers go. For starters, it has been pointed out that spot rates have gained a lot of terrain in their battle against fixed freight shipping rates over the past few months as a result of the latter reaching quite high levels during the contract season. As expected, though, the rates dropped immediately afterwards. However, that appears to not make much difference in terms of the future expectations of various participants in the shipping industry, who tend to prefer the spot rates in this context.

Of course, the bigger picture is just as relevant, if not even more relevant when discussing the shipping industry and its evolution. In this case, that bigger picture is drawn by the shipping activity and economic potential of the East and West gulf coasts. Apparently, the role of the two is bound to be a much greater one. In fact, it has been pointed out that the volume of rerouted shipments initiated from the United States has caused the teu numbers to increase. Large ports like those in New York or New Jersey, where the shipping activity has been intense, have contributed greatly to this increase without affecting the evolution of the freight shipping rates. On the other hand, the Panama Canal is being expanded to accommodate larger vessels as well, while also allowing the transit of a larger number of regular ones. Once again, this increased capacity is not supposed to reflect in the fluctuations of the freight shipping rates.

Looking at the bigger picture from a different angle, the economic factor will also reveal itself as one of particular relevance in the context of debate on the evolution of the shipping industry. The fact that both Asia and the United States have been developing at a slower pace than before comes as no surprise either. In this context, some small shipping companies are expected to face bankruptcy in the very near future. As expected, this slowdown cannot go unnoticed given China's position as an iron ore, coal and oil importer and container exporter, respectively. As a result, it is looking for solutions to achieve an increased domestic consumption in order to remain independent of the international market fluctuations. These solutions include reduced export rates to lure buyers and thus increase the export activity, among many others.

Overall, the shipping industry is expected to face a number of challenges in the very near future, thus forcing its participants to keep an eye on the evolution of Asian and US markets alike. According to various expert opinions, their evolution will revolve around a number of factors which include the evolution of freight shipping rates and the reorganisation of steamship lines and will be bear the mark of overcapacity, on a micro level, and the economic slowdown of both the United States and Asian countries, on a macro level. However, a number of measures are being taken in an attempt to soften the impact of this economic slowdown on the container shipping industry by increasing the domestic consumption and thus boost the export activity in the unfavourable context of currency devaluation and increasing unemployment rates.