Wednesday , 13 November 2019
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Descartes: US importers looking at Asian alternatives to China

With the trade war between the US and China showing no signs of abating, American importers have begun sourcing products from alternative low-cost Asian countries, according to data from Descartes Datamyne.

China’s share of Asian imports to the US fell by around 4% in the first half of 2018, with single digit percentage increases in volume from Vietnam, South Korea, India and Taiwan.

This translates into an increase of approximately 1m teu in imports from Asian countries other than China in the first six months of 2019. In fact, overall import volumes were up by 1.5% in the first half of this year while import volumes from China slid by 7%.

The final quarter of 2018 saw a 70-80,000 teu reduction in container imports of furniture from China on the trans-Pacific trade route to the US, while there was a 45% increase in furniture shipped from Vietnam.

Brendan McCahill, senior vice president of trade data content at Descartes Datamyne, told CM: “We are seeing some shifts in sourcing and I think that will go on although we aren’t seeing supply chains being disassembled and reconnected.

These shifts have so far been centred in Asia, with Vietnam and Indonesia picking up an increase in furniture for example, rather than closer to home.

McCahill added: “While entire industries are not moving back to the US, the data suggests that large importers and buyers are looking at different options. They may have considered them in the past but now they’re making decisions to go with some of them.”

The first quarter of 2019 saw containerised imports to the US rise by just 3%, after a 10% increase in the previous quarter, with the notion that big shippers were frontloading imports in an effort to beat the tariff deadline.

Many companies prepared for the tariffs by moving slack season cargo in the last quarter of 2018 rather than the start of 2019.

The largest US ports such as the Los Angeles/Long Beach complex benefited at the end of last year with an 11% import increase in the final quarter although this has diminished heading into 2019.

Savannah managed to keep the momentum somewhat with imports picking up by 15% in Q4 2018 and then by 11% in Q1 2019, benefiting from its deep draught, crane investments and proximity to the I-95 corridor.

Carriers are exploring different gateways as well, noted McCahill, with a desire to avoid “perceived congestion”.

The Port of Mobile in Alabama received its first Walmart-related cargo in Q1 2019 – just under 3,000 teu – while Wilmington in Delaware received an additional 20,000 teu of bananas.

In McCahill’s opinion, ports on the East and Gulf coasts will continue to rise in competitiveness due to ongoing investments and their geographical closeness to distribution centres.

“More people live east of the Mississippi river than west and ports are responding to some of that for sure,” he pointed out.

He expects some import growth this year but noted that it is unlikely that 2019 will produce the sharp untick in imports seen at the end of last year.