Feb. 14 (Bloomberg) -- Container rates on the world’s biggest international trade route are rallying after U.S. imports of manufactured goods rebounded from the first decline in two years.
U.S. container imports gained 1.6 percent in the fourth quarter from a year earlier, compared with a drop of the same amount in the previous three months, data from Newark, New Jersey-based PIERS show. Volumes from northern Europe and the Mediterranean rose 12 percent. Rates to carry 40-foot boxes to the West Coast from China rose 29 percent since Dec. 16, according to Clarkson Plc, the world’s largest shipbroker.
Shipping lines will make money again this year after “deep losses” at the end of 2011, said Jon Windham, an analyst at Barclays Capital in Hong Kong. Investors should buy shares of A.P. Moeller-Maersk A/S and Neptune Orient Lines Ltd., according to Morgan Stanley, which expects charter rates to more than double this year. U.S. cargo volumes will rise as much as 3.5 percent to a five-year high in 2012, UBM Global Trade predicts.
“The data show U.S. households and businesses are still looking to take in imports,” said Paul Dales, a senior economist at Capital Economics Ltd. in London, whose 1,200 clients include hedge funds, banks and insurance companies. “The U.S. economy is not doing brilliantly, but at least it’s growing and probably will continue to grow this year.”
The cost of moving a loaded forty-foot steel box to the West Coast from China was last at $1,824, from $1,418 on Dec. 16, Clarkson data show. That’s still 5.6 percent lower than a year ago after a capacity glut drove rates down as much as 30 percent in 2011. Average costs to charter ships carrying 4,400 twenty-foot boxes for six to 12 months will rise to $18,000 a day this year, from $8,700 in 2011, according to Morgan Stanley.
The gain in volume to the U.S. from Europe accounted for 95 percent of fourth-quarter growth, and contrasts with a 0.9 percent decline in imports from Asia, according to PIERS, a unit of UBM Global Trade. Cargoes totaled 4.27 million units last quarter, the data show.
The 17-nation euro weakened to its lowest quarterly average since September 2010 against the dollar, making the region’s goods more competitive, as its debt crisis deepened. China’s yuan strengthened for an eighth consecutive quarter against the dollar. The Asian nation’s global exports rose 13.4 percent in December, compared with 17.9 percent a year earlier, data from the customs bureau show.
The fourth-quarter gains in the U.S. may have been caused by last-minute imports for retailers who had delayed purchases in the third quarter, said Louis J. Le Gendre of International Shipping & Logistics in Chatham, New Jersey. Some shipping lines cut services or idled vessels. The management consultant expects U.S. volumes to continue to “gently pick up.”
Global container volumes will rise 7.7 percent this year, Clarkson said last month, reducing a previous estimate of 8.2 percent. That’s still more than its prediction for a 7.3 percent expansion in the global container fleet. About 90 percent of trade moves by sea, according to the Round Table of International Shipping Associations.
While China-West Coast box rates are rebounding, they are still 36 percent below the $2,833 reached in July 2010. Maersk, owner of the world’s largest container line, will report a 7.7 percent drop in net income to 13.8 billion kroner ($2.45 billion) for 2012, the mean of 15 analyst estimates compiled by Bloomberg show. Shares of the Copenhagen-based company rose 20 percent this year, compared with an 8.9 percent gain by the MSCI All-Country World Index of equities.
World trade in goods and services will expand 3.8 percent this year, from 6.9 percent in 2011, the International Monetary Fund said last month. The Washington-based group cut its forecast by 2 percentage points from September.
The U.S. economy will grow 2.2 percent in 2012, compared with 1.7 percent last year, according to the mean of 89 economist estimates compiled by Bloomberg. The U.S. expanded at the fastest pace since mid-2010 in the fourth quarter as factory orders advanced for two consecutive months, and unemployment reached the lowest level in almost three years in January.
That growth may be curbed as the euro-zone crisis weakens global trade. The region’s $12 trillion economy will drop 0.45 percent in the first three months of this year and continuing contracting through the end of 2012, according to the median of as many as 12 economist estimates compiled by Bloomberg.
Federal Reserve Chairman Ben S. Bernanke told the House Budget Committee in Washington on Feb. 2 that the pace of the U.S. recovery had been “frustratingly slow” and that left the economy “vulnerable to shocks.”
Other types of vessels have yet to rebound. The Baltic Dry Index, a measure of commodity shipping costs, slumped 55 percent from the start of this year, according to the Baltic Exchange, which publishes freight rates along more than 50 maritime routes. Very large crude carriers, each hauling about 2 million barrels of oil, dropped 14 percent to $27,089 a day, Clarkson data show.
Expectations for earnings may improve after a group of shipping companies said they would seek to raise annual contract prices. The Transpacific Stabilization Agreement, whose 15 members include Maersk, said Feb. 9 it would ask customers for an increase of at least $500 per forty-foot box for shipments from China.
The shippers’ position is being strengthened by economic indicators. U.S. consumer confidence reached a one-year high in the week ended Feb. 5, the Bloomberg Consumer Comfort Index showed. The unemployment rate fell to 8.3 percent in January, the lowest since February 2009, according to the Bureau of Labor Statistics. Companies added 243,000 workers in January, the most in nine months, the Labor Department said Feb. 3.
That’s boosting demand for consumer goods. Cars and light trucks sold at an annual rate of 14.1 million units last month, the most since August 2009, data compiled by Bloomberg show. Homebuilders’ confidence rose in January to the highest level in more than four years, according to the National Association of Home Builders/Wells Fargo. More home buying increases demand for furniture, the largest item brought to the U.S. in containers, said Mario Moreno, an economist at UBM Global Trade.
Factory output rose 0.9 percent in December, the largest increase in a year, according to Federal Reserve data. Factory orders advanced 1.1 percent that month, the second month of gains, Commerce Department data show. The order backlog climbed 1.4 percent, the most since March 2008.
“We’re seeing a consistent pickup in U.S. indicators across the board, and we’re seeing it in import growth as well,” said Dean Maki, chief U.S. economist at Barclays in New York. “The U.S. is back on a more solid growth trend.”
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