How much faster are goods flowing from China to the US?

  • In the week ending 22 October, the number of laden container ships sailing from China to the US rose 24% year over year, compared with growth of 2.5% in the previous week; it rose 1% week over week, following a decline of 7% the week before.
  • Over the same period, container shipping volume from China to the US rose 38% year over year, compared with a decline of 2% in the previous week; it rose 7% week over week. This measure tracks container capacity used by ships in twenty-foot equivalent units (TEUs) and complements the ship count.
  • Goldman Sachs cautions that weekly trade data are susceptible to timing effects and that observing changes over several consecutive weeks is more useful for assessing the trend.

Why look at two weeks of arrivals at the Port of Los Angeles?

  • Port Optimizer data show that scheduled arrivals at the Port of Los Angeles totaled approximately 93.7 thousand TEUs in the week ending 23 October, down 29% week over week and 10% year over year.
  • Forward-looking data as of 20 October projected that scheduled arrivals in the week ending 30 October would rebound 82% week over week to approximately 170.5 thousand TEUs, then fall 19% week over week to approximately 138.4 thousand containers in the week ending 6 November; the two weeks would be up 86% and 46% year over year, respectively.
  • The arrival schedule points to continued year-over-year strength, but the week-over-week changes move in opposite directions across the two weeks. Goldman Sachs is watching whether peak-season volumes can be sustained and whether geopolitical developments and energy prices will suppress demand.

Is the recovery in freight volumes showing up in land transport and freight rates?

  • In the week ending 17 October, West Coast rail intermodal volume rose 17% year over year, compared with 15% growth in the previous week; in the week ending 19 October, the West Coast trucking load availability index rose 6% week over week and 53% year over year.
  • Over the same period, West Coast trucking spot rates excluding fuel rose 7% week over week and 40% year over year. Ocean container freight rates from China and East Asia to the North American West Coast rose 3% week over week in the week ending 23 October, reaching 4.1 times their level a year earlier.
  • Goldman Sachs expects adjustments to global shipping capacity triggered by geopolitical events, potential surcharges and this year's early start to the peak season could keep ocean freight prices volatile in the coming weeks. However, the bank's supply-chain congestion indicator shows that overall flow is close to pre-pandemic levels.

What conditions shape the assessment of inventories and transportation stocks?

  • The upstream business inventory index rose from 49 in August to 61.4 in September, moving into expansion; the retail inventory index fell from 61.9 to 53.8, remaining in expansion but at a slower pace. Over the same period, the inventory cost index rose from 78.6 to 79.9, indicating faster cost expansion.
  • Goldman Sachs believes constrained trucking supply, together with stable demand and an ISM index above 50, could support the transportation sector. The bank's channel checks have yet to show that high energy prices are hurting consumer resilience, but it considers them one possible reason for the recent weakness in transportation stocks.