Port Tracker report points to increased import activity ahead of next round of tariffs

United States-bound imports trended down from the pre-holiday peak while still coming in at higher-than-usual levels, with retailers importing merchandise in advance of a coming tariff increase in January, according to the new edition of the Port Tracker report issued today by the National Retail Federation (NRF) and maritime consultancy Hackett Associates.

The ports surveyed in the report include Los Angeles/Long Beach, Oakland, Tacoma, Seattle, Houston, New York/New Jersey, Hampton Roads, Charleston, and Savannah, Miami, Jacksonville, and Fort Lauderdale, Fla.-based Port Everglades. Authors of the report explained that cargo import numbers do not correlate directly with retail sales or employment because they count only the number of cargo containers brought into the country, not the value of the merchandise inside them, adding that the amount of merchandise imported provides a rough barometer of retailers’ expectations.

“Imports have usually dropped off significantly by this time of year but we’re still seeing numbers that could have set records in the past,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Part of this is driven by consumer demand in the strong economy but retailers also know that tariffs on the latest round of goods are set to more than double in just a few weeks. If there are shipments that can be moved up, it makes sense to do that before the price goes up.”

Port Tracker reported that U.S.-based retail container ports handled 1.87 million TEU (Twenty-Foot Equivalent Units) in September, the most recent month for which data is available, which was off 1.3% compared to August and up 4.6% annually.

October was pegged at 1.89 million TEU for a 5.5% annual gain, and November was estimated to hit 1.81 million TEU for a 2.8% annual gain. December (1.79 million TEU), January (1.81 million TEU), and February (1.7 million TEU) were projected to rise 3.8%, 2.8%, and 0.4%, respectively.

The Port Tracker report noted that imports set a monthly record of 1.9 million TEU in July, which occurred in advance of 10% tariffs on $200 billion in goods from China that took effect in September and are scheduled to increase to 25% in January. And it added that while not overall records, October, November and December’s numbers are each projected to be the highest on record for those months. Prior to 2018, Port Tracker said that the highest monthly number on record was 1.83 million TEU, which was set in August 2017.

U.S.-bound imports for the first half of 2018 came in at 10.3 million TEU, which marks a 5.1% annual increase, with all of 2018 forecasted to come in at 21.4 million TEU, which would be a 4.4% annual gain over 2018’s 20.5 million TEU, the current record for imports.

Hackett Associates Founder pulled no punches in the report, assessing what is driving these numbers.

“President Trump’s trade war with China and the threat of even higher tariffs in 2019 have created a mini-boom in imports and businesses have rushed to bring goods into the country ahead of the tariffs,” he wrote. “We are clearly in a politically motivated trade environment.”

What’s more, Hackett wrote that the rate of import growth in 2018 is set to be slower than 2017, with 2019 expected to be weaker, barring an agreement being reached between the United States and China.

“If we look at the new U.S. agreement with Mexico and Canada to replace the North American Free Trade Agreement, it does not take much to declare victory,” he wrote. “Despite the import growth through September, the West Coast is feeling the brunt of the tariff war as can clearly be seen in our year-to-date growth tables at the end of this newsletter. The East Coast ports are outperforming the West Coast and Savannah continues to have the highest year-to-date growth rate.”