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Monthly Cargo Imports Hit Record as Retailers Rush Through Tariff Window

As companies stepped up the pace to bring merchandise into the country ahead of what was a Jan. 1 threat of a 25 percent increase in tariffs on goods from China–now postponed for 90 days–imports at the major U.S. retail container ports set another new record in October, reaching 2 million containers, according to the monthly Global Port Tracker report from the National Retail Federation and Hackett Associates.

U.S. ports covered by Global Port Tracker handled 2.04 million Twenty-Foot Equivalent Units in October, a 9 percent increase from September and 13.6 percent more than year earlier. A TEU is one 20-foot-long cargo container or its equivalent. The October number was the highest for a single month since Global Port Tracker began counting cargo in 2000, topping the previous record of 1.9 million TEU set in July.

“President Trump has declared a temporary truce in the trade war, but these imports came in before that announcement was made,” said Jonathan Gold, vice president for supply chain and customs policy at the NRF. “We hope that the temporary stand-down becomes permanent, but in the meantime there has been a rush to bring merchandise in before existing tariffs go up or new ones can be imposed. China’s abuses of trade policy need to be addressed, but tariffs that drive up prices for American families and costs for U.S. businesses are not the answer.”

November cargo imports are estimated at 2.01 million TEU, a 14 percent year-over-year increase, while December, typically a slow month with holiday merchandise already on the shelves, is forecast at 1.83 million TEU, up 6.1 percent year-over year. Those numbers would bring 2018 to 21.8 million TEU, an increase of 6.5 percent over last year’s record 20.5 million TEU, Global Port Tracker noted.

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The report said year over year growth rates and total volume are expected to slow considerably in January, when 10 percent tariffs on $200 billion worth of Chinese products that took effect in September had been scheduled to increase to 25 percent. Trump announced last weekend after a meeting with Chinese President Xi Jinping that the increase would be put on hold while the two countries conduct 90 days of negotiations.

Cargo imports for January 2019 are forecast to be down 2.1 percent from a year earlier to 1.72 million TEU, while February shipments are seen dipping 1 percent to 1.67 million TEU. Things are seen picking up in March, with a projected 1.7 percent rise to 1.57 million TEU, and in April, when a 3.7 percent increase to 1.7 million TEU is forecast.

“We see a significant slowdown in import growth in 2019 as the market adjusts to higher prices due to the Trump tariffs and the impact on consumer and industry confidence going forward,” Hackett Associates founder Ben Hackett said. “We project that imports at our monitored ports will have grown significantly in 2018, but that there will be no import growth in the first half of 2019 compared with the same period in 2018.”

While cargo numbers do not correlate directly with sales, the current imports are being driven by this year’s strong retail sales. NRF has forecast that 2018 holiday season retail sales–excluding automobiles, restaurants and gasoline stations–will increase between 4.3 percent and 4.8 percent over last year. Retail sales for all of 2018 are forecast to be up at least 4.5 percent over 2017.

Global Port Tracker covers the U.S. ports of Los Angeles-Long Beach and Oakland, Calif., and Seattle and Tacoma, Wash., on the West Coast; New York-New Jersey; Port of Virginia; Charleston, S.C.,; Savannah, Ga., and Port Everglades, Miami and Jacksonville, Fla., on the East Coast, and Houston on the Gulf Coast.