November is expected to be a huge month for merchandise imports as United States retailers accelerate shipments ahead of another round of punishing tariffs on imports from China due to go into effect Dec. 15.
However, after more than a year of Trump administration tariffs that upended traditional shipping cycles in the eastbound trans-Pacific trades, 2019 will end up being an unspectacular year, with US containerized imports projected to increase just 0.7 percent from 2018. First-half imports this year increased 2.1 percent over the first six months of 2018, according to the Global Port Tracker published each month by the National Retail Federation and Hackett Associates.
US containerized imports from China declined 5 percent in the first half of 2019, with imports from all of Asia up only 1.4 percent during that period, according to PIERS, a JOC.com sister company within IHS Markit. Modest growth in US imports this fall is directly impacting spot freight rates in the largest US trade lane. The spot rate from Shanghai to the West Coast last week was $1,566 per FEU, down 32.8 percent from Week 36 last year. The East Coast rate was $2,631 per FEU, down 25.2 percent year over year, according to the Shanghai Containerized Freight Index (SCFI) published under the JOC Shipping & Logistics Pricing Hub.
Global Port Tracker projects November imports will increase 8.8 percent year over year, due primarily to front-loading of shipments ahead of Dec. 15 tariffs of 15 percent on about $160 billion of imported merchandise not yet under tariff. This pattern of rushing shipments ahead of tariffs on specific Chinese merchandise classifications has caused imports to move in fits and spurts, upsetting normal seasonal imports. Normally, US imports from Asia build gradually beginning in early summer, peaking in August-October.
November is normally a slack month because most holiday shipments have entered the country to be on store shelves for Black Friday sales the day after Thanksgiving. This year, November will be uncharacteristically strong. “Likely driven by the new tariffs scheduled for December, November’s 1.97 million TEU would be the highest monthly total since the record 2 million TEU seen in October 2018,” Global Port Tracker stated.
Imports choppy throughout 2019
Imports in July, the latest month for which actual import numbers are available, increased 2.9 percent over July 2018. August imports are projected to increase 1.8 percent, September imports will drop 0.7 percent, and October imports will be down 5.5 percent year over year, Global Port Tracker projected. December imports will plunge 9.8 percent compared with December 2018, while January 2020 imports are projected to decline 4.5 percent from the year-ago period, said Global Port Tracker.
With new Trump administration tariffs of 15 percent on Chinese imports that took effect on Sept. 1, and existing 25 percent tariffs on $250 billion worth of imports already under tariff scheduled to increase to 30 percent on Oct. 1, the eastbound trans-Pacific trades will be uncharacteristically choppy for the rest of the year.
“The tariff war with China closely resembles a poker game, with each country continually upping the ante. As each side eyes his hand, things can only get worse,” said Ben Hackett, founder of Hackett Associates.