Retail Imports Settling Down After Year of Tariff Surges
Tuesday, January 14, 2020
After a year of fluctuations driven by the uncertainty of the trade war with China, volume at the nation’s major retail container ports is expected to return to its usual seasonal patterns during the first few months of 2020, according to the Global Port Tracker report released today by the National Retail Federation and Hackett Associates.
“We’ll be more confident after we see the Phase One agreement signed, but right now 2020 looks like it should be back to what used to be normal,” NRF vice president for Supply Chain and Customs Policy Jonathan Gold said.
“We’ve been through a cycle of imports surging ahead of expected tariff increases – some of which got delayed, reduced, or canceled – and falling off again afterward. That’s not good for retailers trying to manage their inventory levels, or trying to make long-term business plans. And tariffs are never good for consumers, businesses, or the economy.”
“It’s not surprising that even the Federal Reserve suggests that the impact of the trade war has a negative impact on the U.S. economy,” Hackett Associates founder Ben Hackett said, citing recent government data on declines in industrial production and increases in inventory-to-sales ratios. “This combination of reduced output counterbalanced by increased inventory underlies the uncertainties of the tariff wars.”
President Trump is scheduled to sign a “Phase One” partial trade deal with China on Wednesday. In announcing the deal, the administration said it would lower tariffs that took effect in September, and canceled another round that was set to take effect December 15, but others remain in effect.
U.S. ports covered by Global Port Tracker handled 1.67 million Twenty-Foot Equivalent Units (TEU) in November, the latest month for which after-the-fact numbers are available. That was down 11.2% from October and down 7.5% year-over-year. With on-again, off-again progress on trade negotiations reported throughout the fall, and other factors affecting shipping, an expected surge ahead of the canceled December tariff increase did not materialize. TEU is one 20 ft. long cargo container or its equivalent.
December was estimated at 1.7 million TEU, down 13.4% from unusually high numbers seen in December 2018, when retailers had frontloaded imports ahead of a scheduled Jan. 1, 2019, tariff increase that was ultimately postponed.
While numbers for the full year are not yet final, estimates indicate that 2019 came in at 21.6 million TEU, a 0.9 percent decrease from 2018 but still the second-highest year on record. Imports during 2018 hit a record 21.8 million TEU, partly due to frontloading ahead of anticipated 2019 tariffs.
January is forecast at 1.8 million TEU, down 5% from January 2019. February is forecast to be down 4.9% year-over-year at 1.54 million TEU, but March is expected to be up 5.2% at 1.7 million TEU, with both swings tied to fluctuations in the Lunar New Year calendar and related factory shutdowns in Asia. April is forecast at 1.78 million TEU, up 2.1% year-over-year, and May is forecast at 1.87 million TEU as summer merchandise arrives, up 1% year-over-year.
Global Port Tracker, which is produced for NRF by the consulting firm Hackett Associates, covers the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast, and Houston on the Gulf Coast. The report is free to NRF retail members, and subscription information is available.
The National Retail Federation, the world’s largest retail trade association, passionately advocates for the people, brands, policies, and ideas that help retail thrive. From its headquarters in Washington, D.C., NRF empowers the industry that powers the economy. Retail is the nation’s largest private-sector employer, contributing $2.6 trillion to annual GDP and supporting one in four U.S. jobs – 42 million working Americans. For over a century, NRF has been a voice for every retailer and every retail job, educating, inspiring, and communicating the powerful impact retail has on local communities and global economies.
About Hackett Associates
Hackett Associates provides expert consulting, research and advisory services to the international maritime industry, government agencies, and international institutions.