Retailers in the United States are driving a significant increase in summer imports as they brace for potential disruptions from a possible port workers’ strike and shipping challenges in the Red Sea, amidst a compressed holiday shopping season.
In July, container imports and freight rates surged, indicating an earlier peak season for the ocean shipping industry, which manages about 80% of global trade. This month is predicted to mark the peak for U.S. retailers, who make up approximately half of that trade, with August expected to remain strong, according to analysts.
Companies importing toys, home goods, and consumer electronics are advancing their holiday promotions to attract customers shopping earlier each year. Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation (NRF), stated, “Retailers don’t want to be caught back-footed.”
Many importers have expedited holiday goods, with some shipping Christmas items as early as May, noted Peter Sand, chief analyst at pricing platform Xeneta. This surge is not driven by consumer spending, which has been restrained by persistent inflation and high interest rates. Instead, it reflects caution against a potential U.S. port strike and the late Thanksgiving date of November 28, which shortens the peak shopping and delivery season.
In July, U.S. container imports reached the third-highest monthly volume on record with 2.6 million 20-foot equivalent units (TEUs), a 16.8% increase from the previous year, partly due to record imports from China, according to Descartes Systems Group.
The NRF, led by Walmart’s U.S. unit CEO and including executives from Target, Macy’s, and Saks, also expects strong imports in August. Walmart, the largest container shipping importer in the U.S., is set to report its second-quarter earnings on August 15.
Retailers are concerned about a potential strike starting October 1 at seaports from Maine to Texas, following stalled negotiations between the International Longshoremen’s Association and the United States Maritime Alliance.
Non-contract spot rates for containers from the Far East to the U.S. West Coast soared 144% from late April to early July but have since decreased by 17%. Similar trends were observed in container routes to the U.S. East Coast and to Europe and the Mediterranean, as reported by Xeneta. Sand mentioned, “We should now see the spot market fall further, but the decline is unlikely to be as rapid as the rise, so it’s still going to be a painful end to the year for shippers.”
Tariff Concerns
The industrial sector significantly contributed to U.S. container import growth in the first half of 2024, partly due to impending tariffs on exports from China and other countries. The Biden administration has imposed new tariffs on numerous goods, set to take effect later this year.
Jason Miller, professor of supply chain management at Michigan State University, highlighted, “The big tariff pull-through is EV batteries and solar cells.” President Biden has maintained tariffs established by his predecessor, Donald Trump, who, as the 2024 Republican nominee, has threatened more and larger tariffs if re-elected. Despite these threats, the response from companies has been subdued, Miller noted.
Maersk, a global shipping company, indicated potential demand surges ahead of the November U.S. election due to tariff uncertainties. Maersk CEO Vincent Clerc remarked, “The United States and China have entered into a much more competitive relationship, and it will not matter whether one party or the other wins the election.”
