Volume pressure on top U.S. ports appears to be easing, a development that could eventually help lead to more efficient importing of promotional products and other goods brought stateside from abroad. However, such improvements are far from a given, as other supply chain impediments, like potentially hugely impactful labor strikes, continue to threaten.  

Import Volumes Decline

The monthly Global Port Tracker report from the National Retail Federation (NRF) and Hackett Associates revealed that import volumes at America’s major cargo container ports will fall below 2021 levels for the rest of 2022.

The decline has already begun. U.S. ports covered (see footnote) by Global Port Tracker handled 2.18 million Twenty-Foot Equivalent Units (TEU) – one 20-foot container or its equivalent – in July, the latest month for which final numbers are available. That was down 3.1% from June and down 0.4% from July 2021. The drop was notable, being only the third year-over-year decline in two years and the first since December 2021.

Looking ahead, Global Port Tracker projects that there’ll be a year-over-year decline of 4.3% TEU in August, once ports report numbers. The downtrend will continue in September, dropping 1.8% to 2.1 million TEU. October’s projected fall is 4.8%, to 2.1 million TEU. November will be off 2021’s number by 3.3%, registering 2.04 million TEU. December will tally 2.01 million TEU, a 4% slip.

“The current decline is expected to continue in January 2023, which is forecast at 2.11 million TEU, down 2.6% from January 2022,” NRF noted.

Why the Drop?

The decreases are the result of importers bringing fewer goods to the U.S., a phenomenon that may be influenced by factors including inflation, moderating consumer demand amid rising interest rates and recession fears, and certain importers, including large retailers, being overstocked in items they’re now discounting to sell off, analysts assert.

The anticipated scaleback follows a multi-year stretch in which import volumes skyrocketed as companies clamored to get products stocked domestically for sale amid an outpouring of demand that followed the easing of COVID-related societal restrictions.

“Consumers are still buying, but the cargo surge we saw during the past two years appears to be slowing down,” said Jonathan Gold, NRF vice president for supply chain and customs policy. “Cargo volumes are solidly above pre-pandemic levels, but the rate of growth has slowed and even slid into negative numbers compared with unusually high volumes last year.”

26.1 Million
the projected number of Twenty-Foot Equivalent Units (TEU), or one 20-foot cargo container or its equivalent, that will be imported at key U.S. ports in 2022. That’s an all-time record.

(Global Port Tracker)

Despite the projected decline in TEU for the remainder of 2022, the year still figures to see an overall increase in import volume, given heavy importing that occurred in the first half.

For the full year, 2022 is expected to total 26.1 million TEU, up 1.2% from last year’s annual record of 25.8 million TEU, according to Global Port Tracker. Notably, certain proactive promo suppliers say they frontloaded importing activity in the first half of 2022, ordering more product farther in advance than would be the norm to help build stock levels.

Positives for Promo Importers?

A deceleration in container volume could help relieve some of the burden ports have experienced over the last year and a half.

The thinking is that with less volume to handle, port operators and their partners in the trucking and rail worlds should, in theory, be able to move along the goods that do come in more expediently.

The potentially positive result for promo companies that are importing could be quicker receipt of foreign-made products, which could lead to faster re-inventorying. While improving significantly, inventory issues stemming from supply chain disruption, which includes port congestion, continue to be a problem for promo.

With the madcap holiday selling season looming, #promoproducts suppliers say they're in a better position this year to meet demand than last year thanks to deeper inventory and improved staffing levels. Still, things are far from perfect. @Tim_Andrews_ASI https://t.co/vL6Bnw0gLd

— Chris Ruvo (@ChrisR_ASI) September 1, 2022

Still, the more efficient movement of imported product from domestic port to warehouse is not guaranteed, even if the projected container volume declines come to pass.

One reason is that while overall volume is starting to drop and congestion has eased greatly at specific ports (West Coast), remaining volumes have shifted and caused pressures at other ports (East Coast, Gulf Coast), so whether a gain is realized may depend on the particular port through which one is bringing goods. Of course, importers may adjust for this, rerouting their containers and thus spreading out volume – which, declining overall, could be a good thing for cargo movement efficiency.

Potential labor disruption is another factor that may offset gains, though.

After dragged-out and contentious contract negotiations, unionized railroad workers are threatening to strike as soon as Sept. 16. The rail workers are a pivotal part of the supply chain puzzle, as the rails move freight to and from ports. If they strike, it could bring “40% of the nation’s freight to a grinding halt,” CNN Business reported. Congress could step in to stave off a strike, but whether the highly partisan legislature will do so is uncertain.

Elsewhere, unionized West Coast port workers that are part of the International Longshore & Warehouse Union continue to be without a contract more than two months after their previous deal expired.

Recent reports indicate that impasses remain related to automation and factors like which union will be responsible for equipment maintenance at a terminal that handles cargo at the Port of Seattle. Both the union and Pacific Maritime Association (PMA), representing employers, have pledged there will be no strike, lockout or slowdowns, but sourcing pros remain concerned that could change if talks sour.

“The key now is dealing with ongoing supply chain issues around the globe and with labor negotiations at West Coast ports and freight railroads,” said Gold. “Smooth operations at the ports and on the rails is crucial as we enter the busy holiday season.”

Other issues – such as factory shutdowns or slowdowns in China due to COVID restrictions – can also complicate matters.

Nonetheless, container volumes returning closer to more historic norms may be one less supply chain headache with which to contend – and thus a boon for promo importers, especially if the worst fears on labor strikes and factory productivity are averted. Ultimately, that can benefit distributors and end-buyers, too.

Footnote: Global Port Tracker, which is produced for the NRF by Hackett Associates, provides historical data and forecasts for the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast; and Houston on the Gulf Coast.