US trade figures reflect rise in air and sea cargo traffic

An improvement in the US trade gap with China is adding to optimism that both air and sea cargo volumes are on the up escalator. Latest figures on the US trade deficit show that although it widened in February, the deficit with China fell to US$16.5 billion, the lowest level in 11 months.

However, it was still the biggest trade imbalance the US has with any country, as rising imports of consumer and industrial goods offset a small increase in exports, according to the Commerce Department.

Reinforcing the optimism has been a month of new, relaunched and extra container ship services between Asia and the US and better volumes at ports and airports.
However, there is still considerable anxiety over container shortages and the benchmarks for ocean rate contracts, most of which are due to be finished by the end of this month.

A bullish forecast for air cargo has come from the Air Cargo Management Group, which says that US international cargo traffic is up by 25 to 30 percent over 2009. Managing director Bob Dahl predicts that a return to the 2007 peak is expected by the end of 2010. He notes that more than 75 recently manufactured freighters, including new 777s, were still mothballed in the US at the beginning of the year and that an indication of the cargo rebound will be given by how fast these get back into service.

Dahl says that the industry will benefit from the severe cutbacks in ocean capacity, as traders who want new inventory urgently will have to turn to the airlines.

Backing up this switch from sea to air is Atlas, the world's the largest operator of Boeing 747 jumbo freighters, which made a $78 million profit in 2009. The company also forecasts that China's industry will move from the coasts to the interior to take advantage of cheaper labour - further strengthening the switch to air cargo.

Volumes are definitely better. Los Angeles, the main air cargo centre on the West Coast , reported a 27 percent increase in February over the same month the year before, bettering the exceptional growth of 2002.

Air and ground handlers UPS and FedEx say their volumes are shooting up, with UPS forecasting a growth in first quarter net profit of 37 percent on "significant acceleration" in international and supply chain revenue. International package revenue grew 18 percent over last year and the supply chain and freight division expanded 14 percent.

At American Airlines, international cargo volumes were up 20 to 30 percent in each month of the first quarter. Total 2010 cargo revenue could be up 15 to 20 percent from 2009, which saw a volume slump of 25 percent.

In ocean shipping the big changes have been as follows:
* Grand Alliance and Maersk adding at least six additional vessels to their transpacific routes over the next two months, increasing capacity by almost 32,000 TEUs.
* Evergreen Line expanding coverage of the US West Coast-Asia-Mediterranean trade routes by reintroducing a 20-port pendulum service for the region that will range from Tacoma to Valencia, Spain, via the Far East, Middle East and Suez Canal.
* The Port of Virginia will be the first US East Coast stop for a service provided by the CKYH steamship alliance that will create a direct weekly link between Virginia and manufacturing markets in Asia. China Shipping Container Line's weekly AAE-1 service is also slated to return
* MOL and "K" Line begin a new all-water service next month from major Asian ports to the US East Coast, via the Suez Canal, using nine vessels with a capacity of 5,500 TEUs.

Ports are notching up big volume increases. Savannah jumped by 32 percent in March over the same month the previous year, the fourth consecutive month of double-digit growth, while overall tonnage through Georgia rose by 25 percent last month.

The Port of Seattle saw huge gains in container volume in February, although container volumes at its Pacific Northwest neighbours Tacoma and Portland were mostly down compared to the same month last year.

Box volumes at the Port of Long Beach jumped by 13 percent year-on-year last month, the fourth consecutive month of volume increases.

Tight capacity continues to bedevil the Pacific route. Industry sources say carriers are limiting space as a bargaining tool in rate negotiations, most of which are due to end this month. The familiar ploy is being used of booked cargo being left behind in favour of higher paying goods. General rate increases of up to $700 per TEU are being sought.

The US Congress has begun an investigation of the transpacific trade and the reasons for the capacity problems.

(Source: Cargo News Asia)