Chinese import and rail volumes and show first signs of recovery

Chart of the Week:  Customs Shipments – China to the U.S.A., Outbound Loaded International Container Volumes – Los Angeles  SONAR: CSTM.CHNUSA, ORAILINTL.LAX

Customs shipments from China to the United States increased significantly
alongside international loaded container volumes for the first time since early
February this past week, signaling the recovery in Chinese production is starting
to hit stateside.

Customs shipments from China to the U.S. increased 45% from
March 7 to March 9, which was not the largest multi-day increase since the
downward trend began on February 10. From February 25 to 28 imports jumped 85%.
What makes this time different is the simultaneous increase in international
loaded container volumes moving out of Los Angeles.

International containers, which are typically 20, and 40 feet
in length, are the preferred container sizes utilized by the shipping lines
such as Maersk who owns many of them. These containers are placed directly onto
railcars and drayage carrier chassis from the ships and docks, which means the
rail will see fluctuations in import volumes much more quickly than long haul
carriers. International loaded container volumes increased 64% or 768 containers
per day from March 5 to March 12, the most significant increase since February
7 prior to the outbreak hitting U.S. import volumes.

One of the biggest questions looming over the domestic
trucking market is how long with the current surge in volumes last? The national
Outbound Tender Volume Index (OTVI) increased 14.5% from February 27 to March
12. Panic buying and shipping, as consumers clear shelves and shippers scramble
to keep inventories in the right places, is seemingly behind the sudden
increase in trucking activity.

The rate at which volumes have grown is not sustainable and will eventually regress to the mean as inventory levels diminish. A large portion of these products has ties to Chinese imports, be it as a finished good or some upstream product such as plastic bottles. As China has been offline, there has been a decline in the availability of these goods with a concern over if/when the U.S. may run out of products.

As with the virus itself in China, the bleed-off in production seems to at least have been halted for the moment as imports and international container volumes show their strongest recovery signals since falling in mid-February. The grey area is when and how does this translate to domestic shipping patterns.

The FMCSA has granted Hours of Service exemptions for any drivers transporting goods related to the COVID-19 outbreak, which should relieve some of the capacity tightness resulting from the surging volumes over the next month. This will also help deplete inventories faster, which makes the import volume recovery more important.

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 for future reference.

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