CGTN Europe interviewed Peter Sand, Xeneta Chief analyst
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00:00Peter Sand is Chief Shipping Analyst from Freight Analytics firm Zanita.
00:04Welcome back to the program, Peter. Great to see you.
00:07So, shipping routes said to be bouncing back thanks to that pause in China-US tariffs.
00:12What are you seeing?
00:15We saw an instant increase for the medium-sized to small-sized shippers,
00:22those that are most uncertain and most threatened by a stop-and-go trade policy like this one.
00:28And rates for those guys jumped by some $500, from $2,500 up to $3,000,
00:35whereas the average-sized shipper saw an uptick too.
00:38But some of them are also, say, booking in advance,
00:42so not feeling the full brunt of all of a sudden moving goods that they didn't expect in the first case.
00:49There have, of course, been plenty of recent disruptions to supply chains, COVID, for example.
00:53But how do ports and shipping companies prepare for an increase in business?
00:58Generally, supply chains operate at their peak and at best when there is foreseeability,
01:05when there is reliability, and when there is a steady flow of goods, right?
01:10So, the one thing that we got now is the exact opposite.
01:14So, ports like carriers, like freight forwarders and those shippers trying to plan ahead are really under the pinch right now
01:25as they have very little foreseeability into their supply chains and goods they normally move out of China.
01:35Can they source those from another place in the medium to long term?
01:39That's what they are looking very much into right now.
01:43So, what does this uncertainty then mean for pricing and also for shipping times?
01:48Well, the carriers that have taken capacity away from the key trade lane across the Pacific
01:57is now redeploying some of that capacity into the market as demand, as you rightly put before,
02:04has jumped almost double from where it normally is this time of year.
02:09So, obviously, that gives the squeeze on capacity and it really leaves everybody in a rush.
02:16But mostly the shippers that have, let me call them, middle margin products,
02:21those products that were basically left unsqueezed out of the market due to the 145% tariffs,
02:27but now find it an opportunity to bring in goods with a tariff rate at 30% right now.
02:34But they need real intelligence, they need data to support that.
02:38And currently, transit times are not moving a lot.
02:41But, of course, if we see congestion around the American ports,
02:45that will, of course, add to the number of days it takes from bringing in cargo
02:48from the east to the west coast of the U.S.
02:52So, businesses are currently operating under the assumption that there is going to be a 90-day pause.
02:58If there's no deal reached by the end of this,
02:59what could be the consequences for importers and also customers?
03:05Well, we get back to square one, right?
03:07And square one is where we were last Monday before the announcement was made
03:12because that will bring everybody back to, well, I cannot call it necessarily a wait-to-see approach,
03:19but it's a full-stop approach, right?
03:22So, lessons learned over the past month or so will be redeployed.
03:25And, obviously, they will still find it extremely difficult to make sure that the selection of goods
03:34is readily available on the shelves for the American consumers.
03:38Most likely, we will also see fewer choice, less variety, that is.
03:43And also, the quality may vary because it very much depends also on the ability of Chinese manufacturing facilities
03:49to deliver as much possible goods in the shortest period of time before the window closes again.
03:55So, everybody is in a rush now and we're counting the days until this window closes.
04:01Fingers crossed the mechanism set up will bring us somewhere else in three months
04:06and then back to 145 and 115.
04:10Peter, great to talk to you.
04:12Thank you for coming on the programme.
04:14That's Peter Sand from Zunita.