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‘Well-Stocked Retailers’ Behind Falling Cargo Imports

Container shipments entering U.S. marine gateways are expected to fall to their lowest level in almost two years during the fourth quarter, according to the National Retail Federation (NRF) and Hackett Associates’ Global Port Tracker. Friday’s report projected that 1.96 million TEUs will enter the U.S. in December, a 6.1 percent drop from the same period in 2021. It could see the lowest import volume since February 2021, the last time the monthly total fell below 2 million TEUs.

The data showed that the year-on-year decline in imports began during the summer. U.S. ports handled 2.26 TEUs in August—up 3.5 percent from July, but down 0.4 percent from the same period in 2021. The first six months of 2022 drew 13.5 million TEUs, a 5.5-percent increase from the first half of 2021.

With September data not yet reported, Global Port Tracker projected a 3-percent year-over-year decrease to 2.07 million TEUs for the month. October is expected to reflect a 9.4-percent downturn to 2 million TEUs, with 2.01 million TEUs projected for November, down 4.9 percent from a year ago. That brings the forecast for the rest of the year to 12.5 million TEUs, 4 percent lower than the same period in 2021. The full year is still expected to outpace 2021’s record 25.8 million TEUs with 26 million total.

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NRF vice president for supply chain and customs policy Jonathan Gold said the numbers reflect retail’s overstocked inventory position. “The holiday season has already started for some shoppers and, thanks to pre-planning, retailers have plenty of merchandise on hand to meet demand,” he said.

Many brought in inventory earlier in the year to combat rising inflation and lingering supply chain disruptions—challenges that persist today. “Despite the lower volumes, retailers are still experiencing challenges along the supply chain, including U.S. ports and intermodal rail yards,” Gold added.

Hackett Associates founder Ben Hackett agreed that falling demand for imports are in line with where the industry’s stock level stands. “The growth in U.S. import volume has run out of steam, especially for cargo from Asia,” he said, echoing Chinese government officials who said the country’s factories have reported “falling orders.” “Recent cuts in carriers’ shipping capacity reflect falling demand for merchandise from well-stocked retailers even as consumers continue to spend.”

The factory closures during China’s October Golden Week holiday, along with “Zero Covid” lockdown policies, “have impacted production, reducing demand for shipping capacity from that side of the Pacific as well,” Hackett added.

The Global Port Tracker projects an import bounce-back in January 2023, forecasted at 2.06 TEUs—up from December, but down 4.9 percent from January 2022. February is projected at 1.8 million TEUs, down 15 percent year over year amid Lunar New Year celebrations. Volume remained high during February 2022 as ports worked through cargo backlogs from 2021’s order surge.

While imports are projected to decline month-over-month through the coming months, NRF forecasts that total retail sales will increase 6 percent to 8 percent over 2021. Sales grew 7.5 percent during the first eight months of the year.

Others expect lower holiday spending, however. Deloitte sees November-to-January sales reaching $1.45 trillion to $1.47 trillion, for a 4-percent to 6-percent increase from last year. AlixPartners estimates a “tepid” U.S. holiday sales increase of 4 percent to 7 percent from last year’s $886.7 billion sales, up more than 14 percent from holiday 2020.

Inflation is the likely culprit. Plus, three-quarters of U.S. shoppers believe the country is in, or is headed for, a recession, market analytics firm Jungle Scout reported. More than half are downsizing their gifting lists and budgets over the coming months, it said.