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Imports Stay High as Retailers Wrestle With Inventory

Imports remain high as the busy season nears for U.S. ports and retailers look to gain control of excess inventory levels.

Import volume is expected to hit near record levels this month at U.S. container ports, according to the National Retail Federation (NRF) and Hackett Associates’ monthly Global Port Tracker.

The robust import numbers come as a rise in containers from China is now expected with Covid-19 restrictions there lifting and business operations starting to normalize. Some shippers may also be hedging against possible disruptions related to the ongoing West Coast dockworker labor contracts by transporting product in early.

“We’re in for a busy summer at the ports,” said Jonathan Gold, NRF vice president of supply chain and customs policy. “Back-to-school supplies are already arriving and holiday merchandise will be right behind them. And the big wild card is what will happen with West Coast labor negotiations with the current contract set to expire July 1.”

Labor talks began in May and then reportedly came to a temporary halt late last month before picking back up. Some now expect negotiations to continue past the current contract’s July 1 expiration.

“We continue to encourage the parties to remain at the table until a deal is done, but some of the surge we’ve seen may be a safeguard against any problems that might arise,” Gold said of the contract talks.

Twenty-foot equivalent units (TEUs) handled by the U.S.’s major container ports are estimated to total 2.31 million this month, which would be a 7.5 percent increase from a year ago.

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That would also be in line with what’s projected for May, with ports not yet releasing TEU data for the month.

Activity is forecast to pick up in July and August, with each month expected to see roughly 2.3 million TEUs handled, according to Global Port Tracker.

A new supply-demand imbalance is emerging among some U.S. retailers now grappling with too much inventory, running in contrast to product shortages seen during the height of COVID-19.

Target Corp. said Tuesday it would roll out markdowns and cancel some orders in an effort to reduce its inventory as it reworked sales estimates. The retailer also said it’s looking more closely at its supply chain to increase speed to market and reduce transportation costs by boosting capacity closer to the ports and working with suppliers on speedier turnarounds.

Categories viewed as discretionary, such as home, are likely to see a pullback in buying as Target focuses on more essential items, such as food and household products, with strong consumer demand.

Target CEO Brian Cornell said in a statement Tuesday the retailer’s business continues to see traffic and sales growth even with the rapidly changing operating environment.

“Since we reported our first quarter results, we have continued to monitor external conditions and have determined the necessary actions to remain nimble in the current environment. The additional steps we are announcing today will ensure that we deliver for our guests while driving further growth,” Cornell said.

Walmart Inc. is also working through excess inventory, which is up after several quarters of a buying strategy focused on having items in stock alongside inventory delivery delays. Brett Biggs, executive vice president and chief financial officers, told analysts last month the retailer is now in a “short period of right sizing” its inventory levels.

“We like the fact that our inventory is up because so much of it is needed to be in stock on our side counters, but a 32 percent increase is higher than we want,” president and CEO Doug McMillon told analysts during the company’s earnings call. “We’ll work through most or all of the excess inventory over the next couple of quarters.”