Import levels are expected to fall to their lowest level in nearly two years as 2022 ends, according to NRF and Hackett Associates.
Even as retailers grapple with a glut of inventory heading into the holiday season, imports are falling at the nation’s ports.
The news: Key US ports are expected to end 2022 with imports at their lowest levels in nearly two years, according to the latest Global Port Tracker report released by the National Retail Federation and Hackett Associates.
The data: In August, US ports covered by Global Port Tracker handled 2.26 million Twenty-Foot Equivalent Units (TEUs). That was up 3.5% over July, but down 0.4% from August 2021. The volume of incoming goods are expected to drop off from there. Final numbers are not yet in for September, but the report projects it will be down 3% year over year.
The forecast for the remainder of the year would bring the second half to 12.5 million TEU, which would be down 4% year over year.
Key quote: “The growth in U.S. import volume has run out of steam, especially for cargo from Asia,” Hackett Associates Founder Ben Hackett said, in a statement. “Recent cuts in carriers’ shipping capacity reflect falling demand for merchandise from well-stocked retailers even as consumers continue to spend. Meanwhile, the closure of factories during China’s October Golden Week holiday along with the Chinese government’s continuing ‘Zero Covid’ policy have impacted production, reducing demand for shipping capacity from that side of the Pacific as well.”
Challenges aren’t over in the supply chain. Still, retailers have merchandise onhand as they enter the peak holiday season, said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold After the bottlenecks of 2021 and a glut of inventory filtering through this year as lead times continue to fluctuate, preparation was a trend for this year’s peak season.
“Many retailers brought in merchandise early this year to beat rising inflation and ongoing supply chain disruption issues,” Gold said. “Despite the lower volumes, retailers are still experiencing challenges along the supply chain, including U.S. ports and intermodal rail yards.”
Looking ahead to 2023, the Global Port Tracker projects that imports will bounce back briefly in January 2023, with a forecast of 2.06 million TEU set to arrive, But that would be down 4.9% from January 2022. Then, February is forecast at 1.8 million TEU, which would be down 15% annually from 2022 amid a typical slowdown as a result of factory closers for the Lunar New Year in Asia. It is likely that February 2022 will be an anomaly due to supply chain backups shaking out earlier this year, according to the Global Port Tracker.
Labor disputes on the West Coast could cause further disruption heading into peak season.
When the first half of 2023 is complete, imports are expected to dip 22% below last year.
That’s according to new data from the Global Port Tracker, which is compiled monthly by the National Retail Federation and Hackett Associates.
The decline has been building over the entire year, as imports dipped in the winter. With the spring, volume started to rebound. In April, the major ports handled 1.78 million Twenty-Foot Equivalent Units. That was an increase of 9.6% from March. Still it was a decline of 21.3% year over year – reflecting the record cargo hauled in over the spike in consumer demand of 2021 and the inventory glut 2022.
In 2023, consumer spending is remaining resilient with in a strong job market, despite the collision of inflation and interest rates. The economy remains different from pre-pandemic days, but shipping volumes are beginning to once again resemble the time before COVID-19.
“Economists and shipping lines increasingly wonder why the decline in container import demand is so much at odds with continuous growth in consumer demand,” said Hackett Associates Founder Ben Hackett, in a statement. “Import container shipments have returned the pre-pandemic levels seen in 2019 and appear likely to stay there for a while.”
Retailers and logistics professionals alike are looking to the second half of the year for a potential upswing. Peak shipping season occurs in the summer, which is in preparation for peak shopping season over the holidays.
Yet disruption could occur on the West Coast if labor issues can’t be settled. This week, ports from Los Angeles to Seattle reported closures and slowdowns as ongoing union disputes boil over, CNBC reported. NRF called on the Biden administration to intervene.
“Cargo volume is lower than last year but retailers are entering the busiest shipping season of the year bringing in holiday merchandise. The last thing retailers and other shippers need is ongoing disruption at the ports,” aid NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If labor and management can’t reach agreement and operate smoothly and efficiently, retailers will have no choice but to continue to take their cargo to East Coast and Gulf Coast gateways. We continue to urge the administration to step in and help the parties reach an agreement and end the disruptions so operations can return to normal. We’ve had enough unavoidable supply chain issues the past two years. This is not the time for one that can be avoided.”
