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Photo courtesy Port of Los Angeles

Retail Imports Growth Turns Negative as Fed Tries to Rein in Consumer Demand

Mike Schuler
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September 7, 2022

More signs that container shipping’s pandemic-fueled bull run is starting to crack.

The National Retail Federation (NRF) on Wednesday published its latest Global Port Tracker report showing retail imports through the top U.S. container ports declining year-over-year in July—only the third such drop in two years and the first since December 2021.

With inflation continuing and the Federal Reserve hoping to cool demand through higher interest rates, retail imports are expected to fall below last year’s levels for the remainder of 2022, according to the NRF.

“Consumers are still buying, but the cargo surge we saw during the past two years appears to be slowing down,” said Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy.

While cargo volumes are still “solidly above pre-pandemic levels,” the rate of growth has slowed and even slid into negative numbers compared with 2021’s unusually high volumes.

“The key now is dealing with ongoing supply chain issues around the globe and with labor negotiations at West Coast ports and freight railroads. Smooth operations at the ports and on the rails is crucial as we enter the busy holiday season,” added Gold.

Labor talks between the International Longshore and Warehouse Union and the Pacific Maritime Association are continuing past the latest contract’s expiration on July 1. Meanwhile, the freight railroads and their union have continued to negotiate after recommendations from the Presidential Emergency Board appointed this summer were released. While both dockworkers and railroad workers remain on the job, there are concerns about potential disruptions the longer they go on.

“The number of vessels waiting to dock on the West Coast has been reduced to near-normal,” said Ben Hackett, founder of Hackett Associates which produces the Global Port Tracker on behalf of the NRF. “But with the switch of some cargo to the East Coast, congestion and pressure on the ports has shifted to the East Coast. The inland supply chain, particularly rail, continues to face difficulties that have resulted in the delay of containers leaving ports, causing terminal congestion that impacts the ability of carriers to discharge their cargo.”

Looking at the numbers, U.S. ports covered by the Global Port Tracker handled 2.18 million TEU in July, which is the latest month for which final numbers are available. That was down 3.1 percent from June and down 0.4 percent from July 2021. July 2022 is now only the third year-over-year decline in two years and the first since December 2021.

While ports have not yet reported August’s numbers, the Global Port Tracker projects the month at 2.17 million TEU, down 4.3 percent year over year. September is forecast at 2.1 million TEU, down 1.8 percent; October also at 2.1 million TEU, down 4.8 percent; November at 2.04 million TEU, down 3.3 percent, and December at 2.01 million TEU, down 4 percent.

The anticipated declining growth follows a monster first half of the year for retail cargo imports that will buoy annual cargo volumes in 2022. The first six months of 2022 totaled 13.5 million TEU, a 5.5 percent increase over 2021’s pace. But the forecast for the remainder of the year would bring the second half to 12.6 million TEU, down 3.1 percent year over year. Still, for the full year, 2022 is expected to total 26.1 million TEU, which would be up 1.2 percent from last year’s annual record of 25.8 million TEU.

The decline is also expected to continue in January 2023, which is forecast at 2.11 million TEU, down 2.6 percent from January 2022, according to the NRF.

The cargo data comes as NRF continues to forecast that 2022 retail sales bewteen 6 percent and 8 percent above 2021. Sales were up 6 percent during the first seven months of the year.

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