Strong Consumer Demand Drives Up TEU Imports but Also Widens U.S. Trade Gap
With strong consumer spending continuing, container import levels at the major U.S. ports are expected to reach their highest levels in two years. The National Retail Federation raised for the second consecutive month its forecast for container imports but the strength of the imports also contributed to a widening of the U.S. trade deficit.
The U.S. Department of Commerce reported that the April trade deficit grew by 8.7 percent. It was the largest it has been since October 2022 with the data citing a surge in imports including motor vehicles, computers, and industrial supplies. The value of imports was up 2.4 percent while exports also edged up by less than one percent.
“Consumers are continuing to spend more than last year, and retailers are stocking up to meet demand, especially as we head into peak shipping season,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “The high level of imports expected over the next several months is an encouraging sign that retailers are confident in strong sales throughout the remainder of the year. Unfortunately, retailers are also facing supply chain challenges again, this time with congestion at overseas ports that are affecting operations and shipping rates.”
The trade figures are projected to continue as the demand for imported merchandise remains strong according to the Department of Commerce. The one positive note they highlighted was a narrowing of the gap with China as the value of goods imported from China declined in April.
The strength of consumer spending also led the NRF to increase its forecast. They jumped the second quarter forecast for the number of TEUs by nearly three percent versus last month’s prediction with the NRF now predicting a total of 6.22 TEU in Q2, which is better than four percent above their expectations in April.
“In the last couple of years, we have witnessed a flattened peak season that has stretched out the volume of imports over extra months versus the strong, consolidated surge seen in the past. Reasons range from retailers restocking following strong sales after the pandemic to trying to get ahead of increased tariffs on goods from China set to take effect in August and ensuring sufficient inventories for the holiday season amid strong consumer demand,” said Ben Hackett, Found of Hacket Associates.
The retail trade association however expects that we are at the beginning of at least a seven-month string of import levels above two million TEU per month at the major ports. They noted that imports surpassed the two million TEU mark for the first time this year in April. They are forecasting further gains peaking at 2.17 million TEU in August but remaining steadily above two million through at least October. The third quarter total is forecast at 6.33 million TEU.
The import numbers come as NRF is forecasting that 2024 retail sales, excluding automobile dealers, gasoline stations, and restaurants to focus on core retail, will grow between 2.5 and 3.5 percent in 2024 over 2023.
For the first half of 2024, they are now projecting a total of 12.1 million imported TEUs. This represents a 15 percent increase versus 2023.