Record US import gains unlikely to be repeated in 2018

Record US import gains unlikely to be repeated in 2018

Spot market container shipping rates did not rise in tandem with volume through the peak season. Photo credit: Shutterstock

Driven by strong retail sales, US containerized importers are projected to end 2017 at a record 20 million TEU, but the 6.3 percent growth clip is unlikely to continue next year, according to the National Retail Federation (NRF).

“Retailers have been bringing in merchandise since late summer, and supply is ready to meet the increased demand that has been building throughout the year,” said Jonathan Gold, NRF vice president for supply chain and customs policy.

The Global Port Tracker, which is published monthly by the NRF and Hackett Associates, projects calendar year US imports will increase 6.3 percent from 2016, double the 2016 growth of 3.1 over 2015.

Compared with the approximately 3 percent increases of recent years, 2017 was a banner year. This strong import growth is not likely to be repeated in 2018. “This turned out to be a boom year for growth in import cargo volume,” said Hackett Associates founder Ben Hackett. More modest growth lies ahead. “We see no decline in volume and no recession — just time for a breather,” he said.

US containerized imports through October increased 5.5 percent over the first 10 months of 2016, according PIERS, a sister product of JOC.com. As has been the trend all year, East and Gulf coast ports had the highest growth rates — 7.01 and 14.3 percent, respectively — and West Coast volume was up 3.14 percent from 2016.

Imports this past January were relatively strong because factories in Asia fast-forwarded production ahead of the Chinese New Year, which was Jan. 28. Many factories in Asia close for a week or two for the celebrations. Therefore, imports in January 2018 are projected to be down 1 percent year over year. However, imports in February are projected to increase 10.9 percent from last February, which this year was the slack month during which factories were closed. Chinese New Year in 2018 falls on Feb. 16, so March will be a slow month, with imports projected to decline 2.1 percent from March 2017.

Despite record imports this year, excess capacity prevented carriers from registering serious increases in freight rates in the eastbound Pacific. Spot rates through August were higher than in the corresponding weeks last year, but rates have been consistently lower year over year since then. The spot rate last week for shipping a 40-foot container from Shanghai to the East Coast was $2,089, down 25 percent from the same week last year. The West Coast rate was $1,548, down 24 percent year over year, according to the Shanghai Containerized Freight Index, which is published under the Market Data Hub on JOC.com

Hanjin Shipping declared bankruptcy on Aug.31, 2016, removing 7 percent of total capacity in the eastbound Pacific, and that caused spot rates to spike last September. However, carriers since April have increased capacity following the shotgun start of their new global shipping alliances on April 1.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.