The surge in imports may be a triumph of hope over reality.
By Bill Armbruster
Have U.S. importers been too optimistic about growth prospects in the U.S. this year?
I think so — and I think that helps explain why there such was a mad scramble for container space out of China in January and the first half of February. Sure, importers wanted to get their goods on the water before factories shut down for a week or two during the Chinese New Year, which began Feb. 14. But there’s always a rush before Chinese New Year. This year’s frenzy was unprecedented.
The chaos was largely due to carriers’ cutbacks in capacity, as I discussed in my last blog entry. In fairness to the carriers, they were caught off guard by the surge in demand. Part of the reason for that surge was the need for importers to replenish inventories. Merchandise was flying off their shelves, so it was natural to feel that they had to step up their orders.
A Bureau of Economic Analysis report showing that personal spending in January was up 0.5% over December — seems to add ground for that sense of optimism. However, that same report shows that disposable personal income – what’s left after taxes — was down 0.4% in January.
Another disappointing indicator was February’s sharp decline in consumer confidence. After rising for three straight months, the Conference Board Consumer Confidence Index dropped to 46.0, down from 56.5 in January.
Meanwhile, the housing market isn’t looking any better. Existing-home sales fell in January, and the market could be in for a rough ride once the home buyer tax credits end on April 30, according to the National Association of Realtors. Housing is a major driver of the import market because people tend to buy more home furnishings when they are moving into a new home. In addition, no meaningful recovery in commercial real estate is expected before 2011.
Most analysts are forecasting 8 to 10% increases in import containers this year, although the Port Tracker report for February, prepared by Hackett Associates and the National Retail Federation, projected that retail container imports would be up 25% in the first half of 2010. Look for that projection to come down to about 15% in this month’s Port Tracker, but it still seems wildly incongruous with the NRF’s forecast that retail sales will grow just 2.5 percent this year.
As for the data on container trade, The Datamyne’s figures show just a 2.8% increase in arrivals of container imports from China in January. Final figures for February will not be available until March 15, but preliminary figures show an increase of about 12 to 13%. I would not be surprised if it’s even higher. Watch this space for the final tally.
I’ve let you know what I think, but what do you think about the container market this year? Please post your comments below.
Bill Armbruster, the anchor for The Datamyne Blog has covered shipping and trade for 30 years as a reporter and editor with The Journal of Commerce and Shipping Digest. “I’ll be blogging on headline news and current issues in oceangoing commerce, trying to shed some light on the backstories and, wherever I can, supply some sound advice for shippers.” Write to firstname.lastname@example.org
Date posted: March 5, 2010