Spotlight on the volume of container imports tumbling across the US.
Highlights on the impact of new climate regulations on container shipping, the scarcity of small motor vehicles, and more.
Trending discussion on small businesses across the US taking the reshoring route to grapple with global supply chain backlogs, resulting in the shift of manufacturing and supply chains to local areas.
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The overarching problem of port congestion plaguing US ports throughout the pandemic seems to have finally eased as container imports tumble. Goods packed in ocean containers account for roughly 25% of US imports and many purchases made by consumers, whose spending fuels as much as 70% of US economic activity. Volume surged as much as 40% from 2019 levels during the pandemic as retailers raced to meet soaring demand for goods.
But now, in the last quarter of 2022, after more than two years of surging demand, the volume of container imports coming through US ports has gone down sharply, raising questions about where a sector once tracked as a supply-chain stress point will hit the bottom.
Spending on services, which had risen during every US recession since 1973, broke that pattern when the US economy slipped into recession in early 2020 with the onset of the COVID-19 pandemic. The resulting drop in spending on that category — at one point as steep as 14% — freed up dollars for goods purchases.
As a result, container import volumes increased. Import volumes across all US ports hit an all-time high in May and pulled back slightly before plunging in August and September. That put the indicator close to the levels last seen in 2019, before the pandemic and a surge in demand for shipments of furniture, clothing, and appliances.
Key Takeaway
The question is whether the trendline — an indicator of the strength of consumption, the broader economy, and trade — flattens out in the coming months, relieving a source of supply-chain distress that had driven prices higher, or whether the boom turns to an outright bust with a potential recession looming.
According to experts, the economy is reverting back to the pre-pandemic ‘normal.’ S&P Global forecasts that worldwide trade would contract slightly in 2022 and 2023 before recovering in 2024.
Meanwhile, large retailers like Amazon and Walmart canceled billions of dollars worth of orders as demand diffused, leading to reduced container imports. With warehouses filled to capacity, importers and retailers are focusing on clearing excess inventory. As a result, stakeholders can expect overseas orders to be weak for the time being.
Highlights
- New climate rules from the International Maritime Organization (IMO), the United Nations agency responsible for regulating global shipping, will have significant implications for how container lines design their services.
- A Cox Automotive analysis of September’s new-vehicle inventory data shows the market has plenty of luxury vehicles, SUVs, and vans. However, the supply of compact and midsize cars and hybrid vehicles is scant.
- As supply chains face major labor hurdles with millions of jobs on offer, one solution might work: automate the jobs we can’t fill.
- While parents are still expected to spend $3.2 billion on candy this Halloween, an S&P Global report predicts that trick-or-treaters will still bag less loot as Halloween candy prices eat into sales volumes.
- While inflation has been the buzzword of 2022, and rightfully so, the supply chain shortages of 2021 continue to reverberate for businesses. It’s possible that the holiday shopping this year comes wrapped in pandemic-influenced and inflation worries.
Trending
While the Amazons of the world have the manpower and the resources to build complex, global supply chains, small businesses had to deal with various raw material shortages throughout the pandemic. Even now, supply chain disruptions contribute to shortages of basic goods on store shelves for the everyday consumer across the US. Grappling with this problem, many small businesses have endeavored to go local, building their own local supply chains.
The pandemic forced companies to reckon with the cost of producing and shipping goods overseas. Many small businesses are joining the reshoring bandwagon, shifting production back to local areas to deal with supply chain delays. Multinational players like Ford Motors, First Solar, Intel, and Lego, have recently announced new US plants as a solution to global snarls that left them without access to key components and empty shelves when consumer demand seemed insatiable as well.
Throughout the pandemic, with disruptions due to COVID outbreaks, the supply chains were spread too thin. As a result, small businesses, unable to fulfill orders, were pushed to the back burner by marketplaces online, with local stores no longer ranking on search engines like Amazon. The experience has been challenging for small-business owners, many of whom found themselves pushed to the back of the supply line because they did not have the order size, capital, or relationships needed to take priority over big firms.
With no end in sight to delays and backlogs, building domestic supply chains from scratch is becoming more appealing and feasible. Small businesses are putting a priority on proximity to their customers so they can react to market demands in real-time, and are leaning toward a resurgent pride in “Made in America” goods.
