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Import levels are expected to remain below 2022 levels through the fall of 2023, as consumer demand tapers off in the face of economic headwinds.
The latest Global Port Tracker from the National Retail Federation and Hackett Associates raised the forecast decline in imports for the first half of the year.
“Consumers are still spending and retail sales are expected to increase this year, but we’re not seeing the explosive demand we saw the past two years,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold, in a statement.
It comes as March totals showed imports down 30.6% year-over-year. While the import levels are in part facing tough comparisons to the sky-high demand levels and port backups of the last two years, the analysts indicated that the quieter ports are a result of a pullback in ordering by retailers that is a result of present conditions. The fall-off in demand comes as inflation continues to be elevated, and the impact of interest rate hikes begin to show up in the everyday economy.
“With economic uncertainty continuing, the impact on trade is clear,” Hackett Associates Founder Ben Hackett said. “Year-over-year import volumes have been on the decline at most ports since late last year and declining exports out of China highlight the slowdown in demand for consumer goods.”
Forecasts for the coming months show declines. April and May’s totals are each expected to fall about 23.5% from last year, while a 16% drop is expected in June.
For the first half of the year, the tracker previously projected that ports would take in 10.8 million Twenty-Foot Equivalent Units (TEU). It now forecasts 10.4 million, which would be down 22.8% from the first half of 2022.
“Our view is that imports will remain below recent levels until inflation rates and inventory surpluses are reduced,” Hackett said.
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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.”