U.S. container imports fall as supply stress gives way to slack

After more than two years of rising demand, the volume of container imports passing through US ports has fallen sharply, raising questions about where a sector once seen as a pressure point in the supply chain supply will reach the bottom.

Container import volumes at all U.S. ports hit a record high in May and dipped slightly before plunging in August and September. That brought the indicator closer to levels last seen in 2019, before the pandemic and a surge in demand for furniture, clothing and appliance deliveries, according to data tracked by Descartes Datamyne.

The question is whether the trend line – an indicator of strength in consumption, the wider economy and trade – flattens in the coming months, relieving a source of distress from the chain. supply that had driven prices up, or whether the boom turns into an outright bust. with a potential recession looming, analysts told Reuters.

Goods packed in shipping containers account for about 25% of US imports and many purchases made by consumers, whose spending fuels up to 70% of US economic activity. Volume jumped 40% from 2019 levels during the pandemic as retailers rushed to meet growing demand for goods.

This surprise wave clogged ports and caused cascading delays, resulting in delayed deliveries of everything from pharmacy supplies to Peloton exercise bikes. As recently as March, the Biden administration’s supply chain task force had been tracking container imports as part of a “dashboard” to monitor distress in the distribution of goods and a contributor to higher prices.

“We’re back to 2019,” said transportation economist Walter Kemmsies, who estimates consumers are returning to their historical spending split of 70% on services and 30% on goods.

Spending on services, which had risen in every U.S. recession since 1973, broke that pattern when the U.S. economy entered a recession in early 2020 with the onset of the COVID-19 pandemic. The resulting drop in spending in this category — up to 14% at one point — freed up dollars for purchasing goods.

Kemmsies said the August and September declines in container import volumes are the result of retailers like Walmart and Amazon.com canceling billions of dollars in orders earlier this year. They made the call after shoppers stopped gorging on sweatpants, couches, remote school laptops and big-screen TVs, and shifted to spending on concert tickets, travel , restaurant meals and other services.

US retailers are now swimming in excess clothing, personal computers, small appliances and holiday decorations and rushing to eliminate bloated product inventories. And they are likely to withhold new orders until that profit-sapping surplus is eliminated.

S&P Global forecast on Tuesday that world trade will contract slightly in 2022 and 2023 before recovering in 2024.
“The warehouses are full. Until importers have emptied their stocks, expect overseas orders to be weak,” shipping consultant Jon Monroe said in a weekly update.

Bank of America analysts hit a similar note on Tuesday. “We are skeptical that a major resupply will arrive soon,” they said.
Source: Reuters (Reporting by Lisa Baertlein in Los Angeles, editing by Kevin Krolicki and Marguerita Choy)

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