US box imports still strong as tariff hike approaches

With trade talks with China still unresolved, retailers appear to be bringing spring merchandise into the country early in case tariffs go up in March, NRF reports.

Imports through the major US retail container ports have dipped since the peaks seen last autumn but remain at higher-than-usual levels as a possible increase in tariffs on goods from China approaches in March, according to the monthly Global Port Tracker report released today by the National Retail Federation (NRF) and Hackett Associates.

“With trade talks with China still unresolved, retailers appear to be bringing spring merchandise into the country early in case tariffs go up in March,” NRF vice president for supply chain and customs policy, Jonathan Gold, said. “We are hopeful that the talks will succeed, but until the trade war is behind us, retailers need to do what they can to mitigate the higher prices that will inevitably come with tariffs.”

US tariffs of 10% on $200 billion worth of Chinese goods that took effect last September are scheduled to increase to 25% on 1 March unless negotiations that began in December are successful.

US ports covered by Global Port Tracker handled 1.97 million twenty-foot equivalent units in December, the latest month for which after-the-fact numbers are available, up 8.8% from November and 13.9% year-over-year. That brought 2018 to a record 21.8 million TEU, an increase of 6.2% over 2017’s previous record of 20.5 million TEU.

January was estimated at 1.83 million TEU, up 4.1% from January 2018. February is forecast at 1.78 million TEU, up 5.7% year-over-year; March at 1.6 million TEU, up 3.8%; April at 1.76 million TEU, up 7.7%; May at 1.89 million TEU, up 3.4%, and June at 1.86 million TEU, up 0.3%. That would bring the first half of 2019 to 10.7 million TEU, up 4.1% over the first half of 2018.

Hackett Associates founder Ben Hackett said: “US containerized imports continue to be robust, with retailers and other businesses trying to beat potential tariff increases in March. The problem is that warehouses and storage facilities are running out of space.”

In an update last week, US freight forwarder Flexport, reported “extreme congestion at Los Angeles/Long Beach and New York ports, as a result of the influx of import volume in advance of the tariff hikes, peak season, and Chinese New Year preparations”. It added: “The large import volume is causing a chassis shortage and long pickup times, so you may experience some shipment delays in the next few weeks.

“New York’s Newark terminal is particularly crowded, and because NY terminals are not open after hours or on weekends (unlike LA/LB), we expect the NY backlog to take longer to clear.”

Patrik Berglund, CEO of container rates specialist Xeneta, last week observed that the port of Los Angeles/Long Beach “is setting all sorts of volume (and port-trucker gridlock) records as containers from China flood into the US west coast, and Maersk swapped two 17,800 TEU’s into that lane; replacing two 13,000 TEUs.

“However, this may not be due to a US economic boom; it’s speculated to be a frantic rush to beat Trump’s 2 March tariff deadline; if a trade deal between the US-China is not reached by that date, tariffs on some 7,500 Chinese goods will increase by 25%, so importers are rushing to beat the deadline.”

He said Maersk had, most likely, moved those ships off the China-North Europe lane because that trade was slow.

“Trump extended his deadline once already (in December 2018), but there is no guarantee it will be extended again. Economists are expecting the US economy to slow down in 2019. Goldman Sachs projected late last year that the US GDP growth will slow to 1.8% and 1.6% in the third and fourth quarters of 2019.

However, these observations about recent strong US container traffic contrast somewhat with an anecdotal report last week from one US freight forwarder. As reported yesterday in Lloyd’s Loading List(https://www.lloydsloadinglist.com/freight-directory/news/Opportunistic-carriers-face-shipper-backlash/73756.htm#.XGLC4s_7RSw), David Bennett, president of US forwarder Globe Express Services, told last week’s Cargo Logistics conference in Vancouver that volumes in the past three weeks had been very soft, with “absolutely no surge in freight leading up to Chinese New Year”.

He predicted that the next six weeks would be even softer, noting that “all the freight that that would typically move at this time of the year has already been advanced”. And he said he doubted that shippers would try to advance freight again ahead of any future possible tariff increases “because anything that could be moved had been moved”.

Global Port Tracker, which is produced for NRF by the consulting firm Hackett Associates, covers the US 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 National Retail Federation is the world’s largest retail trade association, representing retailers, wholesalers and internet retailers from the United States and more than 45 countries.

Source: Lloyd’s