Investing.com -- TD Cowen analysts highlighted significant decreases in shipping volumes at U.S. ports during a critical import season. According to Jason Seidl of TD Cowen, ocean freight data from Asia to the U.S. has seen a steep drop, with volumes down by 30% on the West Coast and 12% on the East Coast. The decline is attributed to several major retailers halting the shipment of non-essential items from China temporarily, due to the ongoing tariff paralysis which continues to impact the transportation sector and the broader economy negatively.
The firm’s industry contacts have observed similar trends, with a North American ocean forwarder and intermodal player witnessing a 30% drop in container volumes on the West Coast and a 12% decrease on the East Coast. Retail and apparel customers are reportedly ceasing shipments of non-essential goods from China temporarily. Furthermore, Kuehne&Nagel (SIX:KNIN) International AG confirmed significant declines in outbound ocean freight from China on their first-quarter call, and these declines are beginning to affect U.S. ports.
The spring season is typically vital for U.S. imports as it follows a post-holiday lull and precedes the summer essential goods import and back-to-school planning. However, the freight market is currently experiencing a "volume air pocket" as the robust volumes seen earlier in the first quarter have given way to sharp declines. Macro data indicates that inventory levels had been rising ahead of the tariff increase, with the ISM Manufacturing Inventories index hitting an expansionary phase in March at 53.4, a level not seen since 2022.
The TD Cowen Rail Survey revealed that 44% of respondents had moved goods ahead of tariffs early in the year. However, the survey also indicated that the amount of goods pulled forward was limited and unlikely to sustain the approximately one month of tariff paralysis already experienced. According to the survey, 48% of shippers pulling freight forward moved only 0%-5% of their volume, 33% moved between 5%-10%, and 16% moved between 10%-15%. This suggests that rail and truck volumes could face significant pressure in the coming weeks, potentially leading to adverse headlines for the transport sector.
