US import volumes falling back to pre-pandemic norms

U.S. import levels rose to record volumes during the pandemic, then descended to a winter lull over the last two quarters. Now, they’re returning to a pre-pandemic state of normal.

That’s according to the latest edition of the Global Port Tracker from the National Retail Federation and Hackett Associates.

For February, which is the latest month for which data is available, Twenty-Foot Unit Equivalents, or TEUs, were down 14.4% from the prior month, and 26.8% year-over-year. February is typically the slowest month of the year, as retailers are in a post-holiday lull and Lunar New Year celebrations close factories in China. Yet this month’s volume of 1.55 million TEU was the lowest since May 2020, when the pandemic closed many factories and stores.

The Tracker projects that March will have a similar showing, falling 28.2% year-over-year. These declines are unusually large, but are coming because of the record highs posted in 2022.

Still, they show that import levels are settling back into historical norms. April is forecast to see 1.86 million TEU. That’s about on par with the monthly average for imports in 2019.

“Last spring and summer were the busiest ever as consumers spent freely and retailers brought in merchandise to meet demand,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold, in a statement. “This year won’t repeat that, but the numbers we’re expecting would have been considered normal before the pandemic.”

The slowdown in imports has been coupled with a dramatic fall in freight rates. According to the Drewry World Container Index, the price of a 40-foot container is now $1,710. That’s 84% below the peak of $10,377, which was reached in September 2021.

“Compared with last year, the flow of import containers on the West Coast continues to decline along with demand as carriers increasingly drop service to Los Angeles-area ports but stretch voyages to include other ports of call to help absorb excess capacity,” Hackett Associates Founder Ben Hackett said. “Meanwhile, freight rates have been impacted by the fall in demand, but new ships are starting to show up and more have been ordered – a sign that carriers expect demand will improve by the time the new vessels are delivered.”

While the volume totals are showing signs of moving past the disruptions of the last two years, labor negotiations on the West Coast ports still remain unresolved. This raises the specter of a potential disruption. Contract negotiations have been stalled between the International Longshore and Warehouse Union and the Pacific Maritime Association.

Workers mostly remained on the job since the last agreement expired July 1, but cracks are starting to show as tensions rise. On Thursday and Friday, the ports of Los Angeles and Long Beach were shuttered as a result of manpower shortages that stemmed from the labor dispute. These are the nation's largest ports, so it will leave some cargo in limbo heading into the Easter weekend. Throughout the year, some cargo has been shifted to other ports on the East Coast and elsewhere to avoid any issues.

"The priority at the moment is resolving labor negotiations at the West Coast ports and avoiding any self-inflicted supply chain challenges on top of those we’ve faced the past three years," Gold said.