US imports are expected to slow in the second half of 2022

American ports are expected to see a slowdown in imports for the second half of 2022, reflecting an economy that is seeing waning productivity and interest rate hikes from the Federal Reserve.

The Global Port Tracker from the National Retail Federation (NRF) and Hackett Associates projects that the second half of the year will bring in 12.8 million Twenty Foot Equivalents (TEUs), a measure that reflects a 20-foot container or its equivalent. That would be a year-over-year decrease of 1.5% for the second half period.

“Retail sales are still growing, but the economy is slowing down and that is reflected in cargo imports,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said.

The slowing second half would follow an all-time-high volume of cargo handling in the first half of the year. The first six months saw a year-over-year increase of 5.5%, with 13.5 million TEUs brought in. For the year, the report is projecting 26.3 million TEUs, which would be a 2% increase over 2021’s record of 25.8 million TEUs.

In June, which is the latest month for which numbers are available, the ports tracked by NRF handled 2.25 million TEUs, which was a 4.9% year-over-year increase. But that was down from May, which saw 2.4 million TEUs – a monthly record for the report since it began in 2002. That came as easing supply chain snarls led to a glut of inventory at retailers that is now being moved through markdowns. The chaos can still be observed, as the nation's largest warehouse in California is reportedly running out of space amid slowdowns in spending on home goods, electronics and other categories that were popular amid lockdowns.

The projections for the next six months at the ports offers signs that balance is being restored.

“The heady days of growth in imports are quickly receding,” Hackett Associates Founder Ben Hackett said. “The outlook is for a decline in volumes compared with 2021 over the next few months, and the decline is expected to deepen in 2023.”

The expected reduced activity in the second half of the year comes as supply chain challenges continue to be an issue for brands and retailers, even as taming 40-year-high inflation has become the primary focus of economic leaders. The continued war in Ukraine and labor shortages are continuing to cause disruptions in the systems that move goods.

“Lower volumes may help ease congestion at some ports, but others are still seeing backups and global supply chain challenges are far from over,” Gold said.

Labor-related disputes also have the potential to roil ports, and the American supply chain. A few updates from the last month offer examples:

• On the West Coast, a contract expired July 1 between the Pacific Maritime Association and the International Longshore and Warehouse Union, which represents workers at the largest West Coast ports in California, Washington and Oregon. Seeking to avoid disruptions, retailers brought in cargo early, and sought out ports on the East Coast and Gulf Coast.
• At the Port of Oakland, which is the nation’s eighth largest, operations were shut down briefly in late July by truckers that were protesting a new state gig worker law requiring independent contractors to be classified as employees.
• Freight railroads and workers are at loggerheads over a new contract. A strike was blocked in late July after President Joe Biden appointed a board of arbitrators to oversee negotiations in a still-unresolved dispute that has been ongoing for two years.

The stakes of potential disruption for retailers only grows as retail momentum builds toward the end-of-year holidays, and remains the NRF’s “biggest concern.”

“Concluding both sets of negotiations without disruption is critical as the important holiday season approaches,” Gold said.