Imports Drop to Lowest Level Since Pandemic Started: Report

Vessels line up to offload containers at the Port of Los Angeles on Oct. 27, 2021. (John Fredricks/The Epoch Times)

High inflation, record fuel costs, and a slowing economy have resulted in a sharp decline in U.S. imports—numbers not seen since the start of the pandemic, experts report.

Imports dropped 11 percent in September compared to the same time a year before, driven mostly by a decrease in Chinese trade, according to an Oct. 10 report by Descartes Systems Group, a logistics research firm.

“The decline in Chinese imports was the greatest driver of the overall decrease in U.S. imports and was felt most on West Coast ports as most East and Gulf Ports continued operating at higher overall volumes,” wrote Chris Jones, executive vice president of industry and services at Descartes.

Chinese imports in September were down 18 percent compared to the month before and 23 percent from September 2021.

Carriers began diverting container ships to the East and Gulf coasts earlier this year to avoid logjams at the ports of Los Angeles and Long Beach. As a result, the number of ships waiting to deliver goods to Southern California has dropped to seven Oct. 5 compared to last October when 63 ships waited in line, according to the Marine Exchange of Southern California.

High inflation, which continues to hover above 8 percent in the United States, is a major cause of the slowing of consumer purchasing, according to supply chain management expert Pradip Shukla, Ph.D., an associate professor at the George Argyros School of Business and Economics at Chapman University in Orange, California.

With a stronger dollar, relative to other currencies like the Euro or currencies in Asia, American consumers have more purchasing power, and the United States would import more from Asia, Shukla told The Epoch Times.

“But I think the reason that hasn’t happened is primarily because we’ve had the highest inflation in about 40 years,” he said. “I think the main problem is, American consumers are having to tighten their spending.”

The drastic drop in imports started last month when ports received 12 percent fewer goods compared to August. However, the number of incoming containers was still 9 percent higher than in September 2019.

Despite the drop in volume, the supply chain continues to struggle with delivering backed-up cargo.

The length of time containers lingered at the ports of Los Angeles and Long Beach has remained high, especially for containers shipped by rail, according to the Pacific Merchant Shipping Association (pdf).

Containers stayed on the docks for an average of 16.5 days through August at the twin ports. That time was slightly longer than the month before. For goods leaving by truck, the wait time averaged nearly 6 days, down from 5.6 in July.

In all, 24 percent of all containers moving by truck and 72 percent of rail-bound cargo stayed at the port for more than five days.

Imports Expected to Fall By End of Year

Imports are expected to reach even lower numbers by the end of the year, the National Retail Association reported.

“The growth in U.S. import volume has run out of steam, especially for cargo from Asia,” Hackett Associates Founder Ben Hackett said in the Oct. 7 forecast report generated for the retail foundation. “Recent cuts in carriers’ shipping capacity reflect falling demand for merchandise from well-stocked retailers even as consumers continue to spend.”

Factory closures during China’s October Golden Week holiday and continued COVID-19 shutdowns have impacted production, reducing demand for shipping to the Pacific Coast, Hackett said.

The retail federation’s port tracker projected another drop of 9 percent for imports in October, a nearly 5 percent decrease in November, and a dip of 6 percent to round out the year in December.

December imports would reach the lowest since February 2021, falling below 2 million containers, according to the report. Incoming cargo is forecasted to decrease by 15 percent in February compared to the year before as usual shipping slowdowns return during the Lunar New Year.

Some of the slowdowns can be attributed to stores stocking up early for the holiday season, the retail federation said.

“Many retailers brought in merchandise early this year to beat rising inflation and ongoing supply chain disruption issues,” National Retail Federation Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Despite the lower volumes, retailers are still experiencing challenges along the supply chain, including U.S. ports and intermodal rail yards.”

Spending Priorities Shift

Consumers are cutting back on discretionary spending as the cost of housing, fuel, and other essentials continue to rise, according to Shukla of Chapman University.

Retailers are also not seeing the same shopping trends as last year when consumers rushed to buy holiday gifts starting in October.

“This year, I think it’s a little bit different,” Shukla said. “We aren’t seeing that sort of rush to buy things quickly.”

Another trend Shukla reported was with students and younger consumers who prefer to spend their money on experiences and travel and not as much on tangible items.

“I think we’re seeing a shift where individuals, especially younger individuals, they’re saying if I’m going to give a gift to my friend, I’ll give them an Amazon gift card for $100 or I’ll give them a gift card to restaurants or entertainment,” he said. “And none of that involves having to have something shipped from Asia.”

The ongoing computer chip shortage is also expected to continue and have a worldwide impact on automobile and electronics manufacturing well into mid-2023 or later, he said.

The effects of the shipping slowdown will reach all the way into the Inland Empire. The region acts as a national hub for containers arriving at Southern California ports. Warehouse workers, distribution supply chain workers, and others will be impacted.

“It will have a sort of ripple effect,” Shukla said.