Container Data Reflect Negative Impact of US-China Trade War

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The signing of the Phase One trade deal between China and the US is welcomed, as the latest trade flow volumes highlight the negative impact that the trade war has had on container trade between the two countries.

Figure 1: Top country to country flows between US and Asia. Bars display the level of TEU transferred, while the circles include the YoY growth rate Source: ClipperData derived from CTS

The year-on-year TEU growth rate from China to the US as of November 2019 slumped by -9.8%, with the reverse trade leg plunging by -19.1%.

Our data also show that carriers reduced China – US services from 52 in January 2018 to 48 by January 2020.

In contrast, Vietnam to US TEU volumes soared by 32% year-on-year in November 2019 and by 15.4% in the opposite direction as shippers sought alternative countries to China to source and sell products.

Thailand and Malaysia to US trades also saw strong growth at 16.7% and 29.5% respectively. Meanwhile, US to Malaysia and Thailand trade lanes swelled by 48.1% and 11.3% respectively.

In an interview with Yahoo Finance, Port of Los Angeles Executive Director Gene Seroka noted that imports have been “choppy” at the port around milestones for tariff increases and retaliatory tariffs.

Figure 2: TEU flows between China and the US.  Source: ClipperData derived from CTS

Indeed, our data show that the timeline of both announced and imposed tariffs correlate with a rise and dip in US-China volumes, highlighting the market impact of the trade war.

The pattern of an overall decline in exports from the US to China over the two-year period since the trade was started can also be seen.

In December 2017, on the eve of the trade war, US to China volumes were around one million TEU. This figure plummeted to just over 500,000 TEU by the end of 2019. China to US volumes reached the 240,000 TEU mark in December 2017 but had tumbled to below 200,000 TEU by year-end 2019.

In March 2018, President Trump announced tariffs on aluminium and steel imports from all countries. Some 3% of US steel imports came from China. The industry reacted as China to US volumes fell to around 170,000 TEU, from 240,000 TEU in December 2017.

In April 2018, China imposed tariffs on 128 products it imports from America – our data show that US to China volumes responded by plunging to around 750,000 TEU in May, versus over 900,000 TEU in March.

In May 2018, China to US volumes rose to 240,000 TEU from 170,000 TEU in March. A major factor may have been shippers front-loading volumes after Trump’s announcement in April that he was considering tariffs on an extra US$100 billion of Chinese imports.

In July 2018, US tariffs on US$34 billion of Chinese goods came into effect, while China imposed tariffs on US goods of a similar value. Our data show that US to China goods slumped from 800,000 TEU in June to around 650,000 TEU in July.

Figure 3: TEU flows between Vietnam and US. Source: ClipperData derived from CTS

In 2019, key events appear to hit volumes. For example, when China imposed 5-10% tariffs on one-third of the goods it imports from the US in September, and the US launched 15% tariffs on around US$112 billion of Chinese imports.

Correspondingly China to US volumes fell from 240,000 TEU in August to 220,000 TEU in September and on the reverse trade leg they fell from almost 700,000 TEU in August to 600,000 TEU in September, before sliding to one of the lowest points in the last two years, at just over 500,000 TEU at year-end.

Our US-Vietnam trade flows data also highlight the surge in volumes. US to Vietnam volumes on the cusp of the trade war in December 2017 stood at just over 30,000 TEU, shooting up to over 40,000 TEU at the end of 2019. And trade the other way soared from around 80,000 TEU to 140,000 TEU plus.

November 2019 year-on-year trade flows on significant port to port connections between US and China show that Long Beach fared particularly badly. For example, volumes plunged by -51% from Qingdao to Long Beach and by -31.3% from Yantian.

Figure 4: Top port to port flows from US to China Source: ClipperData derived from CTS

for US to China trade, Long Beach to Qingdao volumes fell by -57.9% and by -43.3% to Shanghai. Los Angeles fared better, but saw volume declines also, including -16% to Ningbo and -24.4% to Shanghai.

But significant port-to-port connections between Vietnam and US have overall experienced a surge. Of the five major port-to-port connections we cover from Vietnam to US, just one shows a dip (-2% for Ho Chi Minh to Los Angeles).

Figure 5. Top port to port flows from Vietnam to US Source: Clipperdata derived from CTS

On trade the other way, just two out of 11 show a decrease (Los Angeles to Ho Chi Minh and Long Beach to Vung Tau).

Figure 6: Top port to port flows from US to Vietnam Source: ClipperData derived from CTS

Some illustrate clearly where a drop in Chinese volumes was compensated for by increased trade to Vietnam. Despite the large drop in volumes between Long Beach and Chinese ports, the US west coast port enjoyed soaring volumes from Ho Chi Minh and Haiphong, at 50.6% and 38.9% respectively (as of November 2019), and at 45.6% and 21.3% for reverse trade flows.

Elsewhere, volumes from Savannah to Ho Chi Minh surged by 78.3% year-on-year in November 2019, versus a fall of -21% from Savannah to Shanghai.

Volumes from Houston to Haiphong jumped by 103% and to Ho Chi Minh by 71.2% versus a drop of -20% from Houston to Shanghai.

While the Phase One deal – signed in January – is a positive step, tariffs of 25% remain in place on US$250 billion of US imports from China.

It is unlikely to lead to a turnaround in US-China container volumes  anytime soon, while trade flows between South East Asia and the US look set to maintain their advance.