Import demand will recover even in 2024


This week’s chart: Inbound Ocean TEU Volume Index – USA Sonar: ioti.usa

Import Container Reservations Measured by the Ocean Teus Index (Ioti) and rebounded sharply after a plunge in April in response to the historic tariffs imposed on Chinese goods. This rapid recovery raises questions about the potential impact on supply chains and surface transport as new waves of imports head towards US ports.

IOTI, a 14-day moving average of 21 feet container departing from the global port to the United States, fell from a high near the pandemic in early April to a holiday low by mid-May.

The threat of tariffs has led businesses to preemptively order goods, stockpile stockpiling stockpiling stockpiling to avoid cost-free taxation. This will significantly reduce demand, especially if we have significantly reduced demand, which is our main target for products from China.

China holds the largest share of US-surrounded container imports. Usually about 40%. Vietnam is the second distant pandemic, accounting for around 8%. Note that these numbers reflect container volumes, not the value of the trade dollar.

China’s reservation share fell from 41% on April 18th to 30%. The rise in orders from countries such as Vietnam and India helped to bridge the gap, but offset only about 10% of the lost volume. Currently, China’s share has rebounded to more than 40%, and IOTI has returned to that level since the same period last year.

The rebound indicates that imports could rise at US ports in the coming weeks. However, the degree of inland cargo movement is heavily dependent on inventory levels, many of which have already risen in anticipation of tariffs.

So far, only international intermodal railway volumes have shown significant losses directly linked to a decline in imports. The volume of international containers (OrailIntl) fell by about 8% from April to May, but domestic container traffic (Oraildoml) and truck bids (OTVI) remained relatively flat.

Inland cargo demand will surge, internal market inventory levels must show meaningful reductions. Furthermore, seasonal items that were not available for early orders could contribute to the next wave of cargo activity.

The current transportation environment remains vulnerable to disruption. It has generally met demand in recent years, but it has been exposed more by declining capacity and lower carrier resilience. Carriers have now rejected load requests at the highest rate since 2022. The rejection rate remains modest, but the volatility and upward trend are noticeable. The surge in demand, concentrated on one side of the country, has quickly tightened capacity.

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