Inventory restocking or just wishful thinking
They don’t call shipping a cyclical business for nothing, so by definition the bad times can’t last forever.
And yet the long awaited restocking of inventories may finally be at hand. At least according to Maersk Line, which expects growth in volumes from Asia to North America to rise by up to six percent this year as US consumers pick up their spending.
If restocking is indeed what is transpiring, the container carriers will be heaving huge sighs of relief because the forecast has been largely negative up to now, just like their net profits.
Most people in the cargo business do not have any high hopes for the industry this year, especially with a reluctance to withdraw enough capacity to make a difference. If anything good does happen this year, it is expected to be in the second half.
This view is supported by Maersk, which bases its positive outlook on the fact that its big cargo-owning customers have reaffirmed their space requirements on the transpacific. Shippers are expecting cargo volumes to pick up and evidently want to ensure they are not caught short by any surge. However, it could also mean that shippers want to secure space just in case shipments pick up. Who can forget the rapid recovery of 2010 that threw the industry into chaos.
Either way, it does indicate a positivity that wasn’t there a month ago, and suggests that the shippers know something we don’t.
At least until now, because China’s purchasing manager’s index, a measure of manufacturing activity on the mainland, was “better than expected” last month. February was the third straight month the PMI increased, expanding in all areas from new orders to exports and imports.
Sure, the improvements have been marginal, but in an export economy the size of China, even a fraction of a percent growth in manufacturing is still significant.
The logical reason is the rebuilding of inventories in the US, and even in Europe, plagued by sovereign debt issues as it is. The holiday season was a good one in the US and retailers reported surprisingly good sales. That means shelves must be empty and the replenishment bounce is now underway.
Of course, that could just be wishful thinking.