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April 8, 2020

US retail imports expected to hit five-year low in March

Estimates show that imports at major US retail container ports dropped to their lowest level in five years in March, and are projected to remain significantly below normal levels through early summer as the coronavirus pandemic continues.

By Beth Wright

Estimates show that imports at major US retail container ports dropped to their lowest level in five years in March, and are projected to remain significantly below normal levels through early summer as the coronavirus pandemic continues.

“Even as factories in China have begun to get back to work, we are seeing far fewer imports coming into the United States than previously expected,” explains Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation (NRF). “Many stores are closed, and consumer demand has been impacted with millions of Americans out of work. However, there are still many essential items that are badly needed and because of store closures cargo may sit longer than usual and cause other supply chain impacts.”

The latest Global Port Tracker report released by the NRF and Hackett Associates shows US ports handled 1.51m Twenty-Foot Equivalent Units (TEU) in February, the latest month for which after-the-fact numbers are available. That was down 17% from January and 6.8% year-over-year. A TEU is one 20-foot-long cargo container or its equivalent.

February numbers are normally lower than January because of annual factory shutdowns in China for Lunar New Year celebrations. This year, however, the shutdowns lasted longer than usual and continued into March because of the coronavirus outbreak. While actual numbers for March are not yet available, estimates show that imports plunged to 1.27m TEU, down 21.3% year-over-year and the lowest level seen since 1.21m TEU in February 2015 during a labour dispute that caused slowdowns at West Coast ports that winter.

April is forecast at 1.44m TEU, down 17.6% year-over-year, while May is expected to total 1.48m TEU, representing a fall of 20.1%. Looking further ahead, June is forecast at 1.41m TEU, down 21.4%; July at 1.61m TEU, a drop of 18.2%; and August at 1.72m TEU, down 12.5%.

Before the coronavirus began to have an effect on imports, February through May had been forecast at a total of 6.9mn TEU but is now expected to total 5.7m TEU, a drop of 17.3%. As recently as last month, monthly numbers had been expected to hit the 2m TEU mark beginning in May. The last time monthly totals fell below 1.5m TEU was in February 2017.

The first half of 2020 is forecast to total 8.93m TEU, a decline of 15.1% from the same period last year. Before the extent of the pandemic was known, the first half of the year was forecast at 10.47m TEU.

Imports during 2019 totaled 21.6m TEU, a 0.8% decrease from 2018 amid the trade war with China but still the second-highest year on record.

“The Covid-19 pandemic is unraveling the economy nationally and globally as most of the world moves toward a lockdown that entails the closure of significant portions of both the service and manufacturing industries,” says Hackett Associates founder Ben Hackett. “The largest drop is forecast for the first half of this year but with uncertainty about the length of the lockdown and extent of the pandemic, the second half may not be in better shape.”

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