US Retailers Rush Holiday Imports Amid Fears of Strikes and Supply Chaos

Retailers are fueling a summer rush of imports to the United States this year as companies guard against a potential strike by port workers and ongoing shipping disruptions from attacks in the Red Sea ahead of a shortened holiday shopping season.

Container imports and freight rates surged in July, signaling an earlier than usual peak season for an ocean shipping industry that handles about 80% of global trade.

July is expected to be the peak for U.S. retailers, which account for about half of that trade, and August is expected to be almost as robust, analysts said.

Companies that import toys, home goods and consumer electronics have brought forward holiday promotions to capture customers who are shopping earlier each season. "Retailers don't want to be caught back-footed," said Jonathan Gold, the National Retail Federation's (NRF) vice president for supply chain and customs policy.

Many shippers expedited holiday goods orders, with some putting Christmas items on the water as early as May, said Peter Sand, chief analyst at pricing platform Xeneta.

The influx is not a result of consumer spending, which has been tethered by stubborn inflation and high interest rates, experts said. Rather, it is a precaution against a potential U.S. port strike and the late Nov. 28 date for Thanksgiving this year, squeezing the peak shopping and delivery season running to Christmas Eve.

In July U.S. container imports registered the third-highest monthly volume on record with 2.6 million 20-foot equivalent units (TEUs), up 16.8% from a year earlier, in part owing to record imports from China, according to supply chain software provider Descartes Systems Group.

The NRF, which is chaired by the CEO of Walmart's U.S. business and includes the CEOs of Target, Macy's and Saks on its executive committee, said it also expects strong August imports. Walmart, the nation's largest container shipping importer, reports second-quarter earnings on Aug. 15.

Retailers are concerned about a possible Oct. 1 strike at seaports stretching from Maine to Texas after talks between the International Longshoremen's Association and the United States Maritime Alliance stalled.

Maersk on Friday outlined the consequences of potential strike disruption at U.S. ports.

"Should a general work stoppage occur on the U.S. Gulf and East Coasts, even a one-week shutdown could take 4-6 weeks to recover from, with significant backlogs and delays compounding with each passing day," Maersk said in a U.S. market update.

Non-contract spot rates for a container going from the Far East to the U.S. West Coast jumped 144% between the end of April and start of July but have since fallen 17%, with similar trends seen in container routes to the U.S. East Coast and into northern Europe and the Mediterranean, according to Xeneta.

"We should now see the spot market fall further, but the decline is unlikely to be as rapid as the rise, so it is still going to be a painful end to the year for shippers," Sand said.

Tariff threat
The industrial sector has been a significant driver of U.S. container import growth in the first half of 2024, partly due to looming tariffs on exports from China and other countries. President Joe Biden's administration levied new tariffs on numerous goods, which will take effect later this year.

"The big tariff pull-through is EV batteries and solar cells," said Jason Miller, professor of supply chain management at Michigan State University's business school.

Biden has maintained tariffs put in place by his predecessor, Donald Trump, who as the 2024 Republican nominee has threatened more and larger tariffs if he regains the White House. Despite that threat, the response from companies has so far been muted, Miller said.

Global shipper Maersk said there could be some pulling forward of demand ahead of the U.S. election in November owing to uncertainty over tariffs.

"Where there seems to be agreement so far is that the United States and China have entered into a much more competitive relationship, and it will not matter whether one party or the other wins the election," Maersk CEO Vincent Clerc said this week.

(Reuters - Reporting by Siddharth Cavale and Lisa Baertlein; Additional reporting by Stine Jacobsen; Editing by David Gaffen, Jamie Freed and David Goodman)