A weaker-than-normal peak shipping season for Asian businesses making goods bound for U.S. markets could be an indication of a sluggish Christmas shopping season.
"There has not been the peak season that the industry is used to," said Jim Newsome, president and CEO of the State Ports Authority, which operates the Port of Charleston.
Newsome visited Asia last month to meet with port customers and said the shipping lines "were a little bit pessimistic" about their near-term outlook. They plan to cancel several scheduled sailings to East Coast ports, including Charleston, through the end of this year.
"I did sense that the global economy is slowing," Newsome said of his visit abroad. "I don't think it's related to the trade war. I think that we've had a long economic run. Europe is slowing down and we're slowing down a little but still growing more than we did a few years back. So we have to watch it."
Spot rates for overseas shipping — the amount a carrier charges for a single, non-contracted shipment — are now lower than what cargo owners are paying under long-term contracts, something Newsome calls "the inverted yield curve of shipping."
"That's not the ideal world," he said. "We like the spot rates to be higher than the contract rates."
Philip Damas, an analyst with London-based Drewry Shipping Consultants, said there is much uncertainty in the global shipping industry with trade concerns, the mandatory use of low-sulfur fuel beginning Jan. 1, higher freight rates and carriers facing continuing financial pressures.
He told the S.C. International Trade Conference attendees that a further consolidation of ship operators is possible as they face $11 billion in extra fuel costs in the coming year — some of which they won't be able to pass along to customers.
Drewry recently revised its forecast for global container throughput to 2.6 percent for this year, down from 3 percent.
Jeff Heller, vice president of intermodal and automotive for Norfolk Southern railroad, said the shipping industry currently is "about as unsettled as you can get."
Heller told the trade conference, which is being held at the Charleston Gaillard Center and concludes Wednesday, that Norfolk Southern doesn't anticipate increases in freight until at least mid-2020.
Charleston's terminals handled 110,025 cargo containers in September — 11.7 percent better than the same month a year ago. Through the first three months of fiscal 2020, the port has handled 361,958 containers, which is nearly 10 percent ahead of the previous year's total.
Newsome said he expects the surplus will shrink through the end of the year as the port feels the impact of cancelled sailings and slower shipments from China, its top trading partner.
Not everyone is bearish on Christmas spending this year.
The National Retail Federation said in its latest forecast that holiday retail sales in November and December will climb between 3.8 percent and 4.2 percent from last year to as much as $730.7 billion.
"The U.S. economy is continuing to grow and consumer spending is still the primary engine behind that growth," Matthew Shay, the federation's president and CEO, said in a statement.
While he acknowledges an economic slowdown, Shay said "consumers are in good financial shape and retailers expect a strong holiday season."