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U.S. Imports up sharply, but is that Fear or Optimism Talking?

July 10, 2014
Some say it’s the economy getting healthier, but others say it could just be importers acting early to beat a potential labor strike at West Coast ports.

Although imports to the U.S. were steady in May from April, the difference between May of this year vs. last year is significant—up 4%, according to researchers at Panjiva. The numbers of these shipments coming into the U.S. changed +1% from April 2014 to May 2014. Previous years’ April to May changes: +5% in 2013, -2% in 2012, +8% in 2011, +12% in 2010, +3% in 2009, and +6% in 2008.

Courtesy of Panjiva

“We are optimistic about the strength of our economy based on imports,” the Panjiva report stated. “We will remain positive about U.S. imports, even if we see a dip in shipment numbers in June; typically, July or August are the strongest months for imports into the U.S. as retailers begin to gear up for the holiday season.”

Another possible explanation for the surge in imports could be importers preparing for the expiration of the West Coast ports contract involving longshoremen.  According to the monthly Global Port Tracker report from the National Retail Federation and Hackett Associates, retailers are bringing holiday merchandise into the country at record levels to protect against potential supply chain disruptions.

Import volume at major U.S. container ports is expected to total 1.5 million containers this month, the report stated, and according to NRF figures, represents the highest monthly volume in at least five years. This follows a trend of unusually high import levels that began this spring as retailers worked to import merchandise ahead of any potential problems.

“We’re still hoping to get through this without any significant disruptions but retailers aren’t taking any chances,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Retailers have been bringing merchandise in early for months now and will do what it takes to make sure shelves are stocked for their customers regardless of what happens during the negotiations.”

The contract between the Pacific Maritime Association and the International Longshore and Warehouse Union expired on July 1. Dockworkers remain on the job as both sides continue to negotiate a new agreement.

Retailers have a number of contingency plans in place, and Global Port Tracker numbers show that some importers have begun shifting cargo to East Coast ports. West Coast ports handled 59 percent of U.S. retail container cargo in May, down from 62 percent in January.

U.S. ports followed by Global Port Tracker handled 1.48 million Twenty-Foot Equivalent Units in May, the latest month for which after-the-fact numbers are available. That was up 3.7 percent from April and 6.6 percent from May 2013. One TEU is one 20-foot cargo container or its equivalent.

June was estimated at 1.46 million TEU, up 7.6 percent from the same month last year, and July is forecast at 1.5 million TEU, up 4.3 percent from last year. August is forecast at 1.51 million TEU, up 1.6 percent from last year; September at 1.45 million TEU, up 1 percent; October at 1.49 million TEU, up 3.8 percent; and November at 1.39 million TEU, up 3.6 percent.

The first half of the year is expected to total 8.3 million TEU, up 6.7 percent over last year. The total for 2013 was 16.2 million TEU, up 2.3 percent from 2012’s 15.8 million TEU.

The import numbers come as NRF is forecasting 4.1 percent sales growth in 2014. Cargo volume does not correlate directly with sales but is a barometer of retailers’ expectations.

While the West Coast contract situation is driving the surge in early imports, Hackett Associates Founder Ben Hackett said the increases in volume also reflect an improving economy.

“The economy is on the upswing,” Hackett said. “There’s been a sharp drop in unemployment, consumer spending has seen solid growth over the last three months, and there’s a strong level of consumer confidence.”

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