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U.S. container imports fall back to pre-pandemic levels, trade deficit shrinks sharply

30 Jan 2023

By Eric Huang        Photo:Kelly

During the pandemic, as the global supply chain encountered unprecedented obstacles, importers’ inventory warnings were triggered, which in turn triggered a two-year container transport climax. Phenomena such as port congestion and inland transportation delays even filled the entire Los Angeles, a large city in the southwest of the United States, with containers! As the epidemic slowed down, it was accompanied by record inflation that eroded disposable income. The shift in spending back to tourism and other previously constrained activities has weakened demand for kitchen appliances, furniture, big-screen TVs, clothing, and other retail goods, leading to a slump in imports. As U.S. imports continue to fall, the "new normal" looks a lot like the old normal. Sales of retail goods began to decline sharply in September last year, and by the end of last year, they were close to the level before the epidemic in 2019.

 

According to the latest global shipping report from Descartes Systems Group, U.S. container imports in December 2022 are on par with pre-pandemic levels, with ports on the eastern U.S. and Gulf Coast seeing the biggest declines, while West Coast ports are starting to regain market share. U.S. container imports topped 1.9 million twenty-foot-equivalent units (TEUs) in December 2022, which was down 19% from a year earlier but 1% higher than December 2019, according to Descartes Systems Group. November 2022 imports were 2.8% higher than November 2019 pre-pandemic levels, and October 2022 imports were 7.2% higher than 2019 pre-pandemic levels, confirming that the volume of imports in the US has been on a downward trend since the second half of 2022.

 

Another interesting aspect of the report is that West Coast ports have begun to regain market share lost to East Coast and Gulf Coast ports last year as importers shift cargo east to avoid possible disruptions from labor negotiations at West Coast ports. . West Coast ports’ market share of total imported containers increased to 38.1 percent in December, up 1.2 percent from November, while East and Gulf Coast ports’ market share fell to 45.5 percent, down 1.7 percent from November — at least compared to November December 2022 vs. November 2022 and Top 5 West Coast ports to Top 5 East Coast and Gulf Coast ports

 

Falling U.S. imports also narrowed the trade deficit, which contracted by the most in nearly 14 years in November, the Commerce Department said on last Thursday, as higher borrowing costs slowed domestic demand, curbing imports. The trade deficit fell 21.0% to $61.5 billion, the lowest since September 2020, and the largest percentage decline in the trade deficit since February 2009.

 

The National Retail Federation (NRF) report also pointed out that retail imports at major U.S. ports have peaked and continued to decline, partly due to a slowdown in the pace of consumer spending, continued economic pressure and retailers increasing inventory in early 2022. Container imports have fallen to their lowest level in nearly two years, prompting the NRF to lower its forecast for early 2023, while saying retail imports have returned to pre-pandemic levels. " Ports have been stretched to their limits and beyond but are getting a break as consumer demand moderates amid continued inflation and high interest rates, " said Jonathan Gold, NRF's vice president of supply chain and customs policy. “Consumers are still spending and volumes remain high, but we’re not seeing the congestion at the docks and ships waiting to unload that were widespread this time a year ago.”

 

However, the NRF lowered its forecast for the first quarter of 2023 by a further 4.6% compared to a month earlier. They do not see imports returning to the 2 million TEU mark before May 2023. They forecast 5.29 million TEUs in the first quarter, down 20% from the 6.61 million TEUs in the first quarter of 2022. This is also expected to be nearly 15% lower than the first quarter of 2021. They also expect throughput in the first four months to rise from a low of 1.63 million TEU in February to a high of more than 1.9 million in January and April. This forecast is in line with that of major container shipping lines. Industry analysts see no sign of a potential surge in container volumes ahead of the Lunar New Year holiday in late January 2023, while shipping lines predict the slowdown will continue into the second quarter of this year.

 

Ports are using this time to recuperate and prepare for the future, but shipping lines are seeing spot rates continue to drop and expect this could put pressure on their long-term contracts with shippers. With container volumes expected to continue to decline, many industry analysts predict that shipping lines will face further pressure from massive overcapacity on key trade lanes by the time those new buildings start entering the market later in 2023.

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