US imports rebound in March, but the outlook remains uncertain.

US imports showed a sign of recovery in March after a difficult February, but the outlook for the future is still uncertain, with wholesale inventories remaining high and cargo flows from China sinking. The National Retail Federation expects US imports to continue to rise, but not to the level seen during the pandemic. Descartes released data on Tuesday showing that US imports were 1,853,705 twenty-foot equivalent units in March, up 4.2% from March of last year and 6.9% from February. Los Angeles and Long Beach experienced the highest import volumes with an increase of 30% and 25%, respectively. However, month-on-month imports fell along the East Coast, with Savannah falling 6%, New York and New Jersey falling 5%, and Charleston falling 3%.

(Chart: Descartes. Data source: Descartes Datamyne)

♦ US imports from China declined in March.

In contrast, imports from China have declined, with a 46,573 twenty-foot equivalent unit decrease in March versus February. Descartes suggests that this drop was offset by a similar increase in Thailand, South Korea, and Japan. According to the data, US imports from China were 586,129 twenty-foot equivalent units in March, down 41.6% from the recent high in August 2022. The percentage of imports from China accounted for 31.6% in March 2023, down from 41.5% in February 2022.

♦ US imports to rise sharply in the coming months says NRF report.

According to the NRF's Global Port Tracker study, imports will increase further and reach 2.13 million twenty-foot equivalent units by August, up 26.7% from levels predicted for March. Jonathan Gold, the NRF’s vice president for supply chain and customs policy, said that these numbers would have been considered normal before the pandemic. He also noted that the aim is to end labour issues at West Coast ports and avoid self-inflicted supply chain challenges on top of those seen in the previous three years.

♦ Does this suggest a return to normalcy for the supply chain?

Despite the NRF's modest forecast for a rebound, the risk is that bloated inventory takes longer to unwind than expected.  The February wholesale inventory-to-sales ratios, as reported by the Census Bureau, show that three categories of containerized goods have very large inventory overhangs, with little progress made in reducing the excess. The wholesale inventory of hardware, plumbing, and heating equipment was 2.47 times sales as of February, up 17% from February 2019. The wholesale inventory-to-sales ratio for household appliances and electrical and electronic goods was at 1.37 in February, 19% above the February 2019 level, and the wholesale inventory of apparel and accessories was 3.04 times sales in February, 46% higher than in February 2019. Although the supply chain conditions have now normalized, as shown by the Global Supply Chain Pressure Index, other indicators suggest significant improvement since the COVID-era crunch, but not a return to full normalcy.

Source: Freight Waves