U.S.-bound shipments are strong in October, reports Panjiva

United States-bound October imports had another strong month, according to data this week issued by global trade intelligence firm Panjiva.  

Total October imports headed up 16.3% annually, following a 15.2% annual September gain, with containerized freight shipments—at 2.904 million TEU (Twenty-Foot Equivalent Units)—up 16.8%, for the month, setting a new record, after an 11.2% September gain. Year-to-date through October, total containerized shipments—at 23.8 million TEU—are off 2.0% annually and in line with 2018 levels.

As was the case in the third quarter, Panjiva said that COVID-19-related healthcare products paced October import growth, with a 47.4% annual increase on the heels of a 52.6% third quarter gain. And consumer staples imports rose 33.0% annually, driven by a 50.4% gain in household and personal care product shipments. Consumer discretionary products headed up 31.3% annually, following September’s 22.0% increase. The pace of growth for this segment will require an increase from September’s 7.1% retail sales increase, “to avoid a rapid buildup of inventories,” Panjiva said.

Imports of household appliances increased 71.6%, with furnishings up 51.7%, with both serving as key drivers of retail sales growth. And leisure goods saw a 23.3% gain, which was paced by toy imports showing late growth in the middle of peak shipping season.

On the industrial side, shipments were up 16.3% in October, in line with September’s 14.1% gain. Six of the seven industrial sectors tracked by Panjiva saw annual gains, in October, with aerospace and defense products the outlier, down 8.4%. And manufacturing imports were also strong, with building products and electrical components up 24.6% and 14.0%, respectively.

Geographically, imports out of China saw a 33.1% annual increase, topping September’s 18.1% gain, and imports out of Vietnam came in at 13.5%, down from October’s 31.4% gain. Panjiva observed that this decline precedes a pending decision based on the White House’s section 301 review of Vietnam’s currency and forestry practices.    

Panjiva Research Director Chris Rogers said that the October numbers continue to represent how the ongoing COVID-19 pandemic is driving both healthcare- and consumer goods-focused imports.  

“Those [segments] are likely to remain higher for some time yet,” he said. “The shipping sector is going to remain heavily focused on those areas. “Imports of goods like household appliances and furniture may not continue to be as high in the future. The reason is that a lot of that demand is driven by stay-at-home requirements, with things like chairs and desks, for example, only being needed to be bought once. I am concerned that the growth we are seeing in some of those products could impact U.S. retail sales…as shipping activity could end up running well ahead of where demand might be.”

New U.S. President and Trade: When asked about the trade outlook, as it relates to an incoming Biden Administration, Rogers said that President-Elect Biden has made things, regarding trade, clear from a directional perspective but not from a detailed perspective.

“Being tough on China is still very much the ‘flavor’ of policy, even if the President-Elect builds out relationships with Europe and Japan and South Korea and tries to build pressure [on China] that way,” explained Rogers. “I don’t think you will see delivery of tariffs on day one. There has been messaging from Biden’s camp that Biden plans to use tariffs as part of a broader strategy. I do think tariffs will remain intact for some time, and it is also worth bearing in mind that trade policy is not going to be his number one concern. Number one is dealing with the pandemic and rebuilding the economy.

His approach may not be tariffs and protectionism; it may be using taxes and subsidies to bring jobs back to America and using things like the Defense Production Act to drive American companies to bring manufacturing back to the U.S. Tariffs are not going away anytime soon, in terms of China. As for Europe, they might go away sooner, particularly for steel and aluminum…and that might help drive EU exports to the U.S., which have been lackluster.”