US retailers rush holiday imports, fearing strikes and disruptions (updated)

Descartes Systems group

09/08/2024 09:56

(Adds Maersk statement, paragraphs 10-11)
    By Siddharth Cavale and Lisa Baertlein
       NEW YORK, Aug 9 (Reuters) - Retailers are fueling a
summer rush of imports to the United States this year as
companies guard against a potential strike by port workers and
ongoing shipping disruptions from attacks in the Red Sea ahead
of a shortened holiday shopping season.
    Container imports and freight rates surged in July,
signaling an earlier than usual peak season for an ocean
shipping industry that handles about 80% of global trade. 
    July is expected to be the peak for U.S. retailers, which
account for about half of that trade, and August is expected to
be almost as robust, analysts said. 
    Companies that import toys, home goods and consumer
electronics have brought forward holiday promotions to capture
customers who are shopping earlier each season. "Retailers don't
want to be caught back-footed," said Jonathan Gold, the National
Retail Federation's (NRF) vice president for supply chain and
customs policy. 
    Many shippers expedited holiday goods orders, with some
putting Christmas items on the water as early as May, said Peter
Sand, chief analyst at pricing platform Xeneta. 
    The influx is not a result of consumer spending, which has
been tethered by stubborn inflation and high interest rates,
experts said. Rather, it is a precaution against a potential
U.S. port strike and the late Nov. 28 date for Thanksgiving this
year, squeezing the peak shopping and delivery season running to
Christmas Eve.
    In July U.S. container imports registered the third-highest
monthly volume on record with 2.6 million 20-foot equivalent
units (TEUs), up 16.8% from a year earlier, in part owing to
record imports from China, according to supply chain software
provider Descartes Systems Group.
    The NRF, which is chaired by the CEO of Walmart's U.S.
business  WMT.N  and includes the CEOs of Target  TGT.N , Macy's
 M.N  and Saks on its executive committee, said it also expects
strong August imports. Walmart, the nation's largest container
shipping importer, reports second-quarter earnings on Aug. 15.
    Retailers are concerned about a possible Oct. 1 strike at
seaports stretching from Maine to Texas after talks between the
International Longshoremen's Association and the United States
Maritime Alliance stalled. 
    Maersk on Friday outlined the consequences of potential
strike disruption at U.S. ports.
    "Should a general work stoppage occur on the U.S. Gulf and
East Coasts, even a one-week shutdown could take 4-6 weeks to
recover from, with significant backlogs and delays compounding
with each passing day," Maersk said in a U.S. market update. 
    Non-contract spot rates for a container going from the Far
East to the U.S. West Coast jumped 144% between the end of April
and start of July but have since fallen 17%, with similar trends
seen in container routes to the U.S. East Coast and into
northern Europe and the Mediterranean, according to Xeneta.
    "We should now see the spot market fall further, but the
decline is unlikely to be as rapid as the rise, so it is still
going to be a painful end to the year for shippers," Sand said. 
  
    TARIFF THREAT    
    The industrial sector has been a significant driver of U.S.
container import growth in the first half of 2024, partly due to
looming tariffs on exports from China and other countries.
President Joe Biden's administration levied new tariffs on
numerous goods, which will take effect later this year.
    "The big tariff pull-through is EV batteries and solar
cells," said Jason Miller, professor of supply chain management
at Michigan State University's business school.
    Biden has maintained tariffs put in place by his
predecessor, Donald Trump, who as the 2024 Republican nominee
has threatened more and larger tariffs if he regains the White
House. Despite that threat, the response from companies has so
far been muted, Miller said.    
   Global shipper Maersk  MAERSKb.CO  said there could be some
pulling forward of demand ahead of the U.S. election in November
owing to uncertainty over tariffs.
    "Where there seems to be agreement so far is that 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," Maersk CEO Vincent Clerc said this
week. 

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US ocean imports hit third-highest monthly level in July    https://reut.rs/3AsZ7L6
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 (Reporting by Siddharth Cavale in New York and Lisa Baertlein
in Los Angeles; Additional reporting by Stine Jacobsen in
Copenhagen; Editing by David Gaffen, Jamie Freed and David
Goodman
)
 ((siddharth.cavale@thomsonreuters.com; Cell: +1 646-288-4330;))