US import surge in July belies fall slowdown forecast

US import surge in July belies fall slowdown forecast

Containerized US imports are projected to set a new record this year.

An unexpected surge in imports in July will take some of the steam out of peak-season volumes this autumn, although 2017 will still be a record year for US imports, according to the Global Port Tracker published by the National Retail Federation (NRF) and Hackett Associates.

“Consumers are buying more, and retailers are scrambling to import more merchandise to keep up with the demand,” said Jonathan Gold, vice president for supply chain and customs policy at the NRF.

Weekly changes in the spot rate in the eastbound Pacific confirm that July was a busy month for imports from Asia. The cost to ship a 40-foot container from Shanghai to the East Coast peaked in late July at $2,685. The West Coast rate peaked at $1,687 per FEU, according to the Shanghai Containerized Freight Index published under the Market Data Hub on JOC.com. Spot rates then edged lower each week for the past five weeks, to $2,231 per FEU to the East Coast and $1,473 to the West Coast this week. This indicates that import volumes were not enough to fill up the vessels leaving Asia and give carriers the leverage they needed to increase their rates.

Also, although some carriers in the eastbound Pacific announced their intention to implement general rate increases on August 1 and September 1, those increases “failed miserably,” according to Alphaliner.

Nevertheless, Global Port Tracker said imports in July set a new monthly record since it began recording imports in 2000. Imports increased 5 percent over June and were up 9.2 percent from July 2016. However, by fast-forwarding their merchandise imports this peak season, US retailers will import somewhat less than expected in the normally busy August to October period. Global Port Tracker projects that August imports are estimated to be 0.1 percent lower than in August 2016.

A second spike in imports appears to be underway in September. Global Port Tracker projects that imports will increase 4.7 percent from September 2016. October imports are projected to increase 2 percent, November imports to decline 2.3 percent, and December imports will edge up 0.5 percent year-over-year. Imports in January 2018 are projected to be 2.6 percent lower than this January, when retailers shipped their imports ahead of the earlier-than-usual Chinese New Year celebrations.  

Ben Hackett, founder of Hackett Associates, cautioned that this year’s robust growth will set the stage for only modest growth in 2018. Thinking that the bumper imports of 2017 will carry over into next year is risky. “As we look forward, our models are projecting a slowdown. The positive takeaway is that this is a slowdown in growth, not an actual reduction in volume,” Hackett said.

Containerized imports in 2017 should set a new record, up 4.8 percent from 2016, according to Global Port Tracker. That means import growth in the second half of this year will slow somewhat from the torrid pace of 7.5 percent growth in the first half of the year. IHS Markit senior economist Mario Moreno is somewhat more optimistic. He recently upgraded his forecast for growth in US imports this year to 6.6 percent from 6.1 percent. 

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