China-US Trade: Vessel Capacity Trends

Sept. 2, 2019

 |  Insights

The China-United States trade war began in early 2018 and has been gradually escalating. Companies conducting trade between the two countries have had to consider ways to mitigate the increase in costs and find alternate sources for production. 

While US importers may have shifted sourcing from China to other countries in Asia, ocean carriers may have also shifted vessel capacity to accommodate the fluctuating trade volumes. To find out how carriers may have shifted their services, we conducted a study focused on the vessels that traveled from China and three other leading US import regions, Taiwan, Vietnam, and Australia to the US. 

The scope of our analysis included Shanghai, Kaohsiung, Vung Tau, and Sydney. We reviewed vessel activity from January through July of 2018 and 2019 and included only vessels bound for the US.


Vung Tau Significantly Increased Total TEU Capacity

First, we reviewed the total TEU capacity of vessel departures bound for the US from the four ports. We found that Shanghai and Vung Tau each had an increase in the total TEU capacity when comparing the first seven months of 2018 with the first seven months of 2019. 

For Vung Tau, it had a notable increase of 401,130 TEUs, or 15%. For Shanghai, the increase was 335,422 or 4%. For Sydney, despite having a smaller total TEU capacity compared to the other ports, the total TEU capacity had a significant drop of 37% to 211,482 in the first seven months of 2019, compared with the same period in 2018. The total TEU capacity from Kaohsiung fell by 194,413, or 5%.

Figure 1: Total TEU capacity of vessels traveling from four ports to the US between January and July in 2018 and in 2019


Shanghai Had a Higher Ratio of Large Vessels in the Early 2019 than in Early 2018

Next, we analyzed the number of vessels handled by the four ports. We also reviewed them by vessel sizes—grade 1 vessels with a 4,000 or fewer TEU capacity, grade 2 vessels with a TEU capacity higher than 4,000 and lower than or equal to 9,999, and grade 3 vessels with a TEU capacity of more than 9,999. 

For Shanghai, although the total number of vessels showed a decrease in the first seven months of 2019 than the same period in 2018, the number of grade 3 mega vessels increased by 24%, while there was a decrease in the smaller grade 1 and grade 2 vessels. As a result, it had a higher total TEU capacity in the first half of 2019 despite having fewer vessel departures. 

For Vung Tau, only grade 2 and grade 3 vessels visited the port during the studied period. The port had an increase in both categories in the first seven months of 2019 by 14% in total, which was consistent to the growth in total TEU capacity. 

The increase in both the total TEU capacity and the number of vessels reflect the significant growth in freight traffic at Vung Tau, which has benefited by the economic growth in Vietnam in recent years. In response to the growth, the government has been making plans to invest in increasing the existing capacity of the ports in Vietnam.

Both Sydney and Kaohsiung had a drop in the total number of vessels handled. For Sydney, the fall in the number of both grade 1 and grade 2 vessels resulted in a decrease from 100 to 59, or 41%, which was accordant with the decrease in total TEU capacity. For Kaohsiung, the number of vessels handled in 2019 was 10% less than that of 2018.

Figure 2: Number of departing vessels by port and TEU capacity to the US from January 1 to July 31 in 2018 and 2019


Vung Tau Had Faster Growing Vessel Activity

Overall, Sydney and Kaohsiung experienced fewer vessel departures and a smaller total TEU capacity of departing vessels bound for the US when comparing the first seven months of 2019 to the same months in 2018. Shanghai and Vung Tau, on the other hand, each experienced a greater TEU capacity. 

Vung Tau was the only port among the four ports to experience both a greater TEU capacity and total number of vessel departures over the 2019 months compared to the 2018 months. While our study does not reflect the actual full container volumes, the vessel activity at Vung Tau appears to indicate faster growing trade activity than the other studied ports. 

Read the full report . This study was part of the August issue of CargoSmart’s Innovating newsletter. Download the August newsletter to further drill down and see the vessel departure trends by month and to read the full newsletter.

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