In the rapidly shifting global economic landscape, an unprecedented trade storm is brewing. The escalating U.S.-China trade friction looms over the global retail industry like gathering storm clouds, with new tariff policies hanging over retailers like the sword of Damocles, threatening profit margins and market share.
Facing these challenges, U.S. retailers aren't waiting idly. They've launched an aggressive stockpiling campaign at unprecedented speed and scale.
NRF-Hackett Report Reveals Retailers' Preemptive Measures
The National Retail Federation (NRF), America's leading retail trade association, has partnered with maritime consultancy Hackett Associates to release the latest Port Tracker Report , revealing the true scale of this stockpiling strategy.
The comprehensive report covers major U.S. ports including Los Angeles/Long Beach, Oakland, Tacoma, Seattle, Houston, New York/New Jersey, Hampton Roads, Charleston, Savannah, Miami, Jacksonville, and Port Everglades in Florida. These gateways to the U.S. economy serve as vital arteries of global trade.
The report emphasizes that import volumes don't directly correlate with retail sales or employment figures, as it tracks container quantities rather than merchandise value. However, import levels reliably indicate retailers' sales expectations - their massive stockpiling reflects both market confidence and tariff concerns.
Warning Signs Amid Strong Sales
Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy, sounded a cautionary note: "With more tariffs potentially coming, retailers have been bringing in as much merchandise as they can before the tariffs hit. While tax cuts and job growth have pushed retail sales beyond expectations this year, the 'wild card' of tariffs could erase much of these gains."
July saw U.S. retail container ports handle a record 1.9 million TEU (twenty-foot equivalent units), up 2.8% from June and 5.6% year-over-year, surpassing the previous record of 1.85 million TEU set in June 2018.
The report forecasts August will set another record at 1.92 million TEU (up 4.8% year-over-year), marking three consecutive monthly records. September is projected at 1.83 million TEU (+2.4%), October at 1.88 million TEU (+5%), with November and December both estimated at 1.79 million TEU (+1.7% and +3.6% respectively).
First-half 2018 imports totaled 10.3 million TEU , up 5.1% year-over-year. Full-year imports are projected to grow 4.4% to 21.4 million TEU , exceeding 2017's 20.5 million TEU.
This import surge coincides with strong retail sales growth. July sales rose 4.9% year-over-year, with a three-month moving average of 5%. NRF has revised its 2018 retail sales growth forecast upward to 4.5% from 3.8%-4.4%.
Industry Perspectives
Ben Hackett, founder of Hackett Associates, observed: "The current shipping boom largely reflects importers' response to the U.S.-China trade war. Consumers appear to be front-loading purchases before tariffs take full effect, but the road ahead may prove bumpy."
Key Factors Driving Stockpiling
Several factors explain this phenomenon:
1. Tariff impacts: U.S. tariffs on Chinese goods are the primary driver, with retailers preemptively importing to avoid cost increases.
2. Retail growth: Strong sales despite tariff pressures, fueled by economic recovery, tax cuts, and employment gains.
3. Supply chain adjustments: Retailers are diversifying suppliers and strengthening existing partnerships.
4. Port congestion risks: Surging imports strain port capacity, potentially disrupting operations.
5. Future outlook: While current conditions appear favorable, prolonged trade tensions could pose significant challenges.
Sector-Specific Concerns
Several areas warrant attention:
• Consumer prices: While stockpiling may temporarily mitigate price increases, prolonged tariffs could eventually raise costs.
• Small businesses: Less able to absorb tariff costs or find alternative suppliers.
• Employment: Potential retail slowdowns could impact hiring.
• Global trade: The U.S.-China dispute affects worldwide trade patterns, potentially benefiting some nations while risking broader protectionism.
While stockpiling represents a short-term strategy, long-term solutions require resolving trade disputes through dialogue and cooperation. In challenging times, collaborative approaches offer the only sustainable path forward.