With the coronavirus causing longer Lunar New Year factory shut-downs in China, imports at major US retail container ports are expected to see a sharper-than-usual drop in February, a new forecast suggests.
“February is historically a slow month for imports because of Lunar New Year and the lull between retailers’ holiday season and summer, but this is an unusual situation,” explains Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation (NRF). “Many Chinese factories have already stayed closed longer than usual, and we don’t know how soon they will reopen.
“US retailers were already beginning to shift some sourcing to other countries because of the trade war, but if shutdowns continue, we could see an impact on supply chains.”
The latest Global Port Tracker report released by the NRF and Hackett Associates shows US ports handled 1.72m Twenty-Foot Equivalent Units (TEU) in December, the latest month for which after-the-fact numbers are available. That was up 1.8% from November but down 12.4% from unusually high numbers at the end of 2018 ahead of a scheduled tariff increase that was ultimately postponed. A TEU is one 20-foot-long cargo container or its equivalent.
December’s numbers brought 2019 to a total of 21.6m TEU, a 0.8% decrease from 2018 amid the ongoing trade war but still the second-highest year on record. Imports during 2018 hit a record of 21.8m TEU, partly due to front-loading ahead of anticipated 2019 tariffs.
January was estimated at 1.82m TEU, down 3.8% from January 2019. February is forecast to be down 12.9% year-over-year at 1.41m TEU and March is expected to down 9.5% year-over-year at 1.46m TEU. Before the coronavirus outbreak, Global Port Tracker had forecast February at 1.54m TEU and March at 1.7m TEU.
While the duration of the coronavirus impact remains unknown, April is currently forecast at 1.82m TEU, up 4.5% year-over-year; May at 2m TEU, up 8.3%, and June at 1.95m TEU, up 8.5%. Those numbers would bring the first half of 2020 to 10.47m TEU, down 0.4% year-over-year.
“Projecting container volume for the next year has become even more challenging with the outbreak of the coronavirus in China and its spread,” says Hackett Associates founder Ben Hackett. “It’s questionable how soon manufacturing will return to normal, and following the extension of the Lunar New Year break all eyes are on what further decisions China will make to control the outbreak.”
A number of businesses have responded to the coronavirus, with VF Corp the most recent to temporarily close about 60% of its owned and partner stores in China. US sporting goods giant NIKE, Capri Holdings, owner of the Michael Kors and Jimmy Choo brands, and Ralph Lauren Corp all made similar statements last week.
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