Carriers Ramp Up Trans-Pacific Capacity on Expected Demand Rally

Yahoo

4 days ago

As importers continue to race for cargo space on the trans-Pacific trade lane, more capacity is kicking back in to capitalize on the demand.
According to data from container shipping analysis firm Linerlytica published Monday, the next four weeks are expected to average 560,000 20-foot equivalent units (TEUs) in cargo departing from Asia to the U.S., a 48.5 percent increase over the low of 377,000 TEUs in the first full week of May.
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Over the past week, ocean carriers have already injected 5 percent more capacity into the trans-Pacific trade lane for sailings between May 26 and July 28, according to data from Sea-Intelligence.
The Port of Long Beach thus far is the primary destination of the uptick in capacity.
Gemini Cooperation partners Maersk and Hapag-Lloyd will introduce a new direct trans-Pacific service with a rotation of Xiamen, China; Busan, South Korea; and Long Beach. The first sailing will take place out of Xiamen on June 24.
China United Lines is getting back in on the action after exiting the trade lane in summer 2023, launching the Trans Pacific West Coast 1 (TP1) service line starting in Shekou, China and dropping off cargo at the Port of Long Beach. The first service will depart Shekou on June 7 and is scheduled to arrive on June 29.
These announcements come after prior revelations from South Korea's KMTC that it would return to the trans-Pacific in June for the first time in 40 years, with the Long Beach port being its lone West Coast stop.
Although the dearth of trans-Pacific sailings in May suppressed volumes at California's San Pedro Bay ports and raised concerns about expectations for the peak shipping season, the 90-day easing of tariffs between the U.S. and China has given way to more optimistic forecasts than had been imagined just one month ago.
Paul Bingham, director of transportation consulting at S&P Global Market Intelligence, still forecasts the twin ports of Los Angeles and Long Beach to see year-over-year volume growth in 2025.
'It's possible that if many deals are made and you have stability in the trading relationships later on in the second half of the year that volumes would actually be higher than our baseline forecast is right now,' Bingham said during a Tuesday briefing held by the Port of Long Beach. 'We have a forecast where the volume of trade slows—still growing, but growing very slowly compared to last year through the port complex.'
S&P Global Market Intelligence does not currently forecast a recession despite the supply chain disruption and geopolitical uncertainty. The benchmarking firm is still baking in falling demand as a potential downside risk, but it would be unlikely to reach the brief early pandemic-level dips when shipments weren't leaving China for the U.S.
'We wouldn't forecast something that would echo that completely, but you could be in a period where the second half of the year sees lower volume than were handled in the first half of the year—very unusually,' Bingham said.
Echoing Port of Los Angeles executive director Gene Seroka, Bingham shoved aside any concerns of a redux of pandemic-era port congestion at the ports.
'As far as the congestion fears go, there's none there,' Bingham said. 'Even with the likely surge that's coming right now out of mainland China, which hasn't gotten here yet, it's unlikely that the ports would run into a problem of performance that would divert volumes somewhere else.'
If anything, Bingham said the 90-day tariff pause could accelerate some market share gains for the California ports, as they remain the shortest route on the trans-Pacific, and the likely first destination of any eastbound cargo.
Port of Long Beach CEO Mario Cordero did not speak directly to congestion, but said there would be a 'slight surge' in cargo headed toward the port system.
'There's a lot of cargo that was held up in China that did not come,' Cordero said. 'If you're a shipper, why would you send your cargo to be subject to a 145-percent tariff? We also know that cargo is going to start coming as we now approach peak season in July.'
Vessels have already started to build up on both sides of the Pacific in the wake of the post-tariff delay rush.
According to the Drewry Container Capacity Insight service, the number of ships waiting at the Shenzhen port complex increased from 17 to 31 between weeks 16 and 20. During the same period, vessels waiting outside the L.A./L.B. twin ports more than doubled from 17 to 42.