US home starts propel household good imports

Big-ticket appliances.

In 2017, US imports of household goods jumped as home projects and construction soared on economic strength, and the outlook calls for continued growth in 2018. Photo credit: Shutterstock.com.

Rising US consumer confidence and demand for new homes is swelling container volumes for importers of household goods. Those shippers are benefiting not just from new construction of single family homes, up 8.5 percent last year, but rising home values that encourage homeowners to invest in new appliances and furnishings and projects that jack home values even higher.

US imports of household goods, including appliances and furniture, jumped 11.5 percent last year — more than twice the five-year compound annual growth rate of 5.7 percent — as the US economy enjoyed three quarters of real GDP expansion exceeding 2.5 percent — the most consistent stretch of growth since the end of the last recession in June 2009.

Housing starts, both single family and multifamily units, are expected to climb in 2018, after getting off to a slow start in a frigid first quarter. IHS Markit forecasts single family housing starts will rise to a seasonally adjusted annualized rate of 914,000 in the second quarter, after averaging 849,000 in 2017. It was the best year for permits, starts, and completions in a decade.

“Customers continue to take on bigger projects as a result of feeling good about their home values; we see that continuing as we move into 2018,” Craig Menear, chairman, CEO and president of The Home Depot, told Wall Street analysts in February. That’s pumping up container volumes shipped by vendors whose products line the shelves at The Home Depot and other retailers.

The double-digit growth in household goods TEU volumes fed traditional store sales and e-commerce sales of bulky items such as sofas, gun safes, and refrigerators. As new homes multiplied, buyers needed everything from refrigerators and washing machines to dining room tables, beds, sofas, chairs, lamps, and other large household items.

As the US housing sector goes, so goes the US economy

“We continue to expect growth in North America,” Marc Bitzer, CEO of Whirlpool, said April 24. The global appliance company’s North American net sales rose 3 percent to $2.5 billion in the first quarter. In 2017, North America accounted for 54 percent of Whirlpool’s 2017 net sales of $21.3 billion.

Altogether, US shippers imported 2.5 million TEU of household goods last year. The 11.5 percent surge in imports built on a 9.1 percent increase in 2016, an early indicator perhaps of a firming economy. Household goods imports by TEU increased only 2.3 percent in 2015, as the economy cooled. Over the past five years, however, those imports rose 32 percent.

Manufacturers of washing machines cleaned up last year, with imports shooting up 22.6 percent year over year to 89,679 TEU, while imports of refrigerators and freezers jumped 16.8 percent to 208,950 TEU. Furniture represented the largest category of household goods imports, at 1.9 million TEU, a 12 percent year-over-year increase from 2016 container volumes.

Los Angeles and Long Beach were the biggest ports for household commodities, with their combined household goods imports topping 1 million TEU last year, a 12.7 percent year-over-year increase. However, Savannah, with a 20.5 percent gain, was the fastest-growing conduit for household goods imports, as shippers diversified their inland distribution strategies to include more ports.

The Port of Savannah handled 228,750 TEU of household goods, compared with 316,204 TEU for the Port of New York and New Jersey, and 162,473 TEU for Seattle and Tacoma, Washington. The Port of Los Angeles had a market share of 24.6 percent in 2017; Long Beach, 18.3 percent; New York/New Jersey, 12.7 percent; Savannah, 9.2 percent; and Seattle and Tacoma, 6.5 percent.  

Contact William B. Cassidy at bill.cassidy@ihsmarkit.com and follow him on Twitter: @wbcassidy_joc.

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