Chart of the Week: Inbound Ocean TEU Quantity Index – USA SONAR: IOTI.USA
Import container bookings, as measured by the Import Ocean TEUs Index (IOTI), have rebounded sharply after plunging in response to the historic tariffs imposed on Chinese language items in April. This swift restoration has raised questions concerning the potential influence on provide chains and floor transportation as a brand new wave of imports makes its approach to U.S. ports.
The IOTI, a 14-day transferring common of twenty-foot containers departing from world ports to the U.S., dropped from near-pandemic-era highs in early April to holiday-period lows by mid-Might.
The specter of tariffs prompted firms to preemptively order items and stockpile stock to keep away from cost-prohibitive levies—tariffs that may have considerably lowered, if not eradicated, demand, notably for items from China, their major goal.
China accounts for the biggest share of U.S.-bound container imports, sometimes round 40%. Vietnam has been a distant second post-pandemic, representing roughly 8%. Notice that these figures replicate container volumes, not commerce greenback values.
China’s share of bookings fell to 30% on Might 18, down from 41% on April 1. Elevated orders from nations like Vietnam and India helped fill the hole, however solely offset about 10% of the misplaced quantity. Now, China’s share has rebounded to over 40%, and the IOTI is again to its degree from the identical interval final 12 months.
This rebound signifies that import volumes may rise at U.S. ports within the coming weeks. Nevertheless, the extent of inland freight motion will rely largely on stock ranges, a lot of which have been already elevated in anticipation of the tariffs.
To this point, solely worldwide intermodal rail volumes have proven a major loss straight tied to imports decline. Volumes of worldwide containers (ORAILINTL) dropped roughly 8% from April to Might, whereas home container site visitors (ORAILDOML) and truckload tender volumes (OTVI) remained comparatively flat.
For inland freight demand to surge, stock ranges in inside markets might want to present significant reductions. Moreover, seasonal items that might not be ordered early might contribute to the subsequent wave of freight exercise.
The present transportation surroundings stays weak to disruption. Whereas it has usually met demand over latest years, lowered capability and weakened provider resilience have left it extra uncovered. Carriers at the moment are rejecting load requests at their highest charge since 2022. Although rejection charges stay modest, their volatility and upward development are notable. A surge in demand targeting one aspect of the nation may rapidly tighten capability.
