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China economy

China trade war starts to hit US ports as front-loading wears off

  • Warehouses throughout the United States are packed with Chinese goods ahead of expected tariff increases in March
  • Ports handled 1.81 million twenty-foot equivalent units in November, down 11.4 per cent from a record of 2.04 million in October
PUBLISHED : Wednesday, 09 January, 2019, 11:58am
UPDATED : Wednesday, 09 January, 2019, 12:03pm

Imports at major container ports in the United States are levelling off after retailers’ months-long rush to bring in Chinese merchandise before higher tariffs hit, according to a retail trade report.

US ports covered by the National Retail Federation (NRF) and Hackett Associates’ Global Port Tracker handled 1.81 million twenty-foot equivalent units (teu) in November, according to the latest data issued on Tuesday.

That was up 2.5 per cent year-over-year, but down 11.4 per cent from the record of 2.04 million set in October. A tue is one 20-foot-long cargo container.

The report landed as the United States and China held talks aimed at ending the trade war that is roiling global financial markets.

The United States and China agreed a 90-day truce in December, which is set to expire on March 1, when tariffs on Chinese goods imported to the US could be increased from 10 per cent to 25 per cent.

Warehouses throughout the United States are packed to the rafters with Chinese goods – ranging from air conditioners and microwaves to footwear and furniture.

“There have been record-high levels of imports over the past several months, primarily due to raised inventories ahead of expected tariff increases,” Hackett Associates founder Ben Hackett said.

Apparel sellers were among the retailers who stepped up purchases as tariffs loomed.

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The value of China clothing exports to the United States jumped 7.9 per cent to US$494.83 billion for the January to October period, according to an analysis of customs data from logistics technology firm Descartes Systems Group Inc.

Top consignees for those Chinese products included JC Penney Purchasing Corp, Forever 21 Logistics LLC, Wal-Mart Stores Inc and Uniqlo USA LLC.

Retailers have “brought in much of their spring merchandise early to protect consumers against higher prices that will eventually come with tariffs,” said Jonathan Gold, NRF’s vice-president for supply chain and customs policy.

The Global Port Tracker forecasts that 2018 imports will have risen 5.3 per cent to a record 21.6 million tue before cooling in the early months of the new year, when imports typically soften due to the post-holiday drop in demand and Lunar New Year factory shutdowns in Asia.

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The deceleration is expected to continue into 2019 as the stand-off between the world’s two largest economies ripples through the global economy.

FedEx Corp slashed its 2019 fiscal forecasts citing a slowdowns in China and Europe, while grains trader Cargill Inc said the trade tensions hit its bottom line.

“We are projecting … an overall weakness in imports for the first half of the year,” Hackett said.