Q1 sees a solid finish with strong U.S.-bound import growth, reports S&P Global Market Intelligence

United States-bound containerized freight imports continued to trend in the right direction in March to end the first quarter, according to data recently issued by S&P Global Market Intelligence, with March growing for the seventh consecutive month, following a 14-month stretch of annual declines.

March imports, at 2.489 million TEU (Twenty-Foot Equivalent Units), posted a 16% annual gain, and first quarter imports, at 7.537 million TEU, rose 15% annually, amid various supply chain disruptions.

Looking at the first quarter, the firm observed that growth was paced by industrial sector activity, ranging from steel to paper, for a collective 20% annual gain, whereas consumer goods shipments rose 8%, home and personal care was up 16%, and consumer electronics and apparel up 3% and 6%, respectively. 

While quarterly growth remained strong, S&P Global Market Intelligence cautioned that this growth comes with the caveat that, for the same period a year ago, imports “were depressed by inventory restocking in the retail sector,” adding that, looking forward, imports are forecasted to head down from current levels, with the second, third, and fourth quarters pegged to increase by 7%, 4%, and 3%, respectively.

For March, the firm said materials sector imports led the way, with 20% growth, which included a 25% gain in paper and forestry products, while chemicals and metals saw gains of 15% and 17%, respectively.

In an interview, S&P Global Market Intelligence Research Director Chris Rogers said that the annual growth, or rebound, in shipments throughout the first quarter has been surprising in some ways.

“Clearly, the trends that that we saw through in January, February and March were pretty consistent across the board, in terms of what's been doing well,” he said. “There is strength in consumer goods except for apparel, and in capital equipment, except for machinery, and there is strength across the board in metals and some weakness in in consumer staples. Those trends have been pretty constant through the quarter and well ahead of last year, when we were clearly in the [inventory] destocking process.”

As for whether the destocking process is over, Rogers said that is not certain, based on manufacturing PMI data. But he noted that is also contingent on specific industry verticals, coupled with the data representing what he called a big rebound compared to a very soft period a year ago.

Rogers said that March finished strong to end the first quarter, tempered, though, with the expectation that things will slow down in the second quarter.

Addressing the 2024 Peak Season, S&P observed there are various uncertainties that need to be monitored, including the potential reopening of the Port of Baltimore in May, the possibility of East Coast port labor strikes, and ongoing delays to Red Sea shipping, which could lead shippers to ship earlier than usual or further divert shipments to West Coast ports.

“We could effectively see a double-peak, or two slightly-lower peaks,” said Rogers. “One may be a little bit earlier than normal, because people just want to be a little bit conservative, particularly if you are dealing with uncertainties around logistics. With Baltimore and in Panama, the container lines have done a really good job of managing around that. Similarly, with the Red Sea, we now know what we've got, which is it's just going to leave China two weeks earlier. So, you're having to make your decision a bit sooner than you normally would. We may well see kind of a month earlier peak for the regular stuff.

And the regular Peak Season, for consumer goods shipping, and then depending on how the polling goes and depending on how people are feeling about the prospect for tariffs, you might see a second mini-peak in November or December, as companies try to preempt the risk of tariffs. Now that might be that it's actually a peak in December and January, because you may well wait and see what the outcome of the election is before actually shipping early. There is an initial slightly early peak because of uncertainty particularly around East Coast ports’ strikes and then the prospect of a second peak very late in the year, depending on the outcome of the election.”

The firm also addressed the possibility of another round of tariffs on U.S. imports from China in the first quarter of 2025, depending on the results of the election this fall. Which it said could see importers pass through to consumer prices, shift sourcing patterns, preempt tariffs by shipping early, adding that 2018 and 2019 shipping patterns suggesting the latter could lead to an import surge late in the fourth quarter this year.