Outlook on U.S. Exports: Forecasting the “Perfect Storm” or Something Else?
Many of us are familiar with the term “perfect storm.” This cliché term implies conditions are ideal for the creation of a pending negative event. Recently, it has been used to describe the outlook for U.S. exports.
- Rates in East-West trades from the U.S. are at record lows, allowing cost per unit to remain competitive as part of manufacturing costs.
- Overseas labor and production costs of similar goods exported from the United States are increasing, making exported goods more affordable compared to offshore sourcing streams.
- Decreased bunker charges and mitigated low sulfur fuel charges have been the norm since mid-2015.
- Ocean carriers report ample available vessel space and available container equipment, especially in port areas. As carriers grapple with capacity adjustments, exporters can benefit from the surplus space available on export ships to Asia and Europe.
- Carrier alliance adjustments and ocean carrier consolidation seek to optimize routing options and right-size available capacity. While new alliances and mergers are not expected until late 2016 or early 2017, exporters have the benefit of “jumping on board” before possible capacity tightening appears in the global trades.
- Regulatory matters such as the SOLAS Verified Gross Mass (VGM) are expected to have little or no on the growth of U.S. exports. This is a global requirement.