Finally, some traction
The economy has come into sharp focus, and for good cause. The previous yo-yo pattern of import levels reached a peak in July that appears to have extended into August. Nonetheless, data from around the globe is a mix, with a weak recovery as Europe struggles with rising COVID-19 numbers but China’s exports remain solid. Will this last? A lot of uncertainty is in play.
Our third-quarter projection suggests that the West Coast will have its best quarter in five years but that weaker growth both month-over-month and year-over-year will follow in the final quarter of this year. July’s peak in imports was a surprise considering the massive inventory rise while most stores were closed this spring and weak imports in May and June. But inventories needed restocking after stores began to reopen and consumers spent at least part of their stimulus checks and the unemployed used some of their $600 supplementary jobless benefits. Nonetheless, declining income and continued pandemic fears have created worries for the U.S. recovery despite the rise in spending on the back of a sharp rise in savings.
Second-quarter gross domestic product fell by a record amount at an annualized rate of 31.7 percent, an almost incomprehensible figure. There are signs that the recovery will continue, albeit at a hesitant pace, but only a return to work and renewed consumer spending can haul the economic recovery out of this tailspin.
Meanwhile, carriers have brought back a significant amount of laid-up capacity and reinstated a number of services even though we are beginning to see some sailing cancellations on the transpacific by some lines. Freight rates are still rising as carriers have managed their capacity well, made easier by the fact that the three super alliances are not breaking rank. In all likelihood, the Federal Maritime Commission is keeping a close eye on potential collusion.