Dropping Demand for Chinese Exports

The weeks leading up to Chinese New Year typically bring increased demand for exports from China and spikes in ocean freight prices. Unlike previous years, 2022 has seen the opposite. Container demand to U.S. East/West coast ports according to the China Containerized Freight Index has dropped by 27% and 26%.  Paired with the decreased demand in volume, freight rates from China have seen an unusual decrease in the weeks leading up to Chinese New Year. What is normally a 4% increase over 10 weeks leading up to Chinese New Year has turned into a 27% decrease in ocean freight rates since mid-November 2022. Furthermore, Chinese ocean export rates have fallen 50% from February 2022 to mid-November 2022.



A decline in Chinese exports does not necessarily mean a decline in import demand to the United States. Manufacturing uncertainties in China have caused many importers to shift their operations outside of China. As a result, a 4.7% decrease in Chinese exports from January to November brought a 13.3% increase in Vietnamese exports and a 14.9% increase in Indian exports. If the trend of moving operations outside of China continues, the East Coast may begin to see more activity than Los Angeles/Long Beach ports. South and Southeastern Asia freight typically moves to the East Coast via the Suez Canal and a significant portion of Los Angeles/Long Beach port activity is driven by Chinese freight. While it may be too soon to tell now, the long term effects of manufacturing operations changes could bring drastic changes to the major East and West Coast ports in the US in the future.



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