Kuehne + Nagel is seeing everything from a complete stop in supply chain activity to a significant decline in volumes and bookings on the China-US tradelane, as a result of the hefty import tariffs imposed by the Trump administration this month.
But it is a contrasting picture between sea and air freight.
During a conference call with analysts after the publication of the Switzerland-based group’s Q1 results last week, CEO Stefan Paul commented: “It varies a little bit from vertical to vertical.
“I would say hi-tech and semi-conductors are stable, but this is more air freight. They continue to uplift, there is no change. In the consumer [goods] vertical, the large shippers have stopped or paused their bookings to a certain degree. Industrial is a mixed picture, and automotive was, anyway, already down since a number of quarters.”
He continued: “So there’s no pattern to it, but what we clearly see is that the bookings out of China to the US have been decreasing significantly over the past couple of weeks or so.”
Focusing on sea freight, Mr Paul said the slowdown in bookings out of China to the US was probably around 25% to 30%. However, this was almost equalled by an uptick in the other Asian markets and tradelanes.
“So, what we see is that everything that is missing out of China will be, to a certain degree, offset. There is a clear shift into South-east Asia. Whether it’s 1:1 for the second quarter, or there is a slight decrease in volumes, we cannot yet confirm.
“Does that mean we have already a clear picture on the entire volume development for the second quarter? No, not yet. It’s a little bit too early.”
Another three to four weeks of observing booking trends would probably be required, said Mr Paul, adding: “For now, I would say, it’s a flattish development when we talk about bookings and volumes in sea freight. So, there is not a collapse in the marketplace. That’s the message.”
His analysis was supported by liner consultancy Sea-Intelligence, which issued a report yesterday that said: “If we look at the trade war, the current result is quite simply a shift in manufacturing away from China and over to primarily countries in South-east Asia, which are presently subject to lower tariffs.
“This clearly supports the notion that tariffs will simply lead shippers to seek the second-lowest cost alternative. And it appears that the US is not the second-lowest cost.”
As for air freight, Mr Paul said bookings were “continuously strong, and it might even be that the second quarter will be stronger than the first, in terms of volumes”.
Turning to yields, he said it was also to difficult to see how these will develop. He noted: “I would tentatively state that the yield in sea freight will come under a bit more pressure than in air freight.
“So, to sum up, a very good trend in air freight with a high demand in the marketplace and on yields, a little too early to give a guidance for the entire second quarter, but volatile as we speak.”