Are We Headed for More Inventory Overhang as Retailers Bring Goods in Early?

The National Retail Federation (NRF) expects the major U.S. container ports to have another busy month in September ahead of a potential labor strike at East Coast and Gulf Coast ports, according to the Global Port Tracker report released by the NRF and Hackett Associates.

“This is a critical time as retailers prepare for the all-important holiday season, and we need every port in the country working at full capacity,” said NRF VP for Supply Chain and Customs Policy Jonathan Gold. “Many retailers have brought cargo in early and shifted to alternate ports as a precaution, but it is vital that labor and management at the East Coast and Gulf Coast ports actually sit down at the negotiating table and bargain in good faith for a new contract so we can avoid a disruption of any kind when their contract expires.

“A strike would be another blow to the supply chain as it continues to face challenges and to the nation’s economy at a time when inflation is finally coming down and the Fed is poised to lower interest rates,” continued Gold.

The contract between the International Longshoremen’s Association (ILA) and the United States Maritime Alliance (USMA) covering East and Gulf Coast ports will expire on September 30. The ILA has continued to threaten to strike if a new contract is not reached by then. NRF said last week it renewed its call for both sides to agree before the contract expires, with NRF President and CEO Matthew Shay stating a disruption “would significantly impact retailers, consumers and the economy.”

“Import levels are being impacted by concerns about the potential East and Gulf Coast port strike,” Hackett Associates Founder Ben Hackett said. “This has caused some cargo owners to bring forward shipments, bumping up June through September imports. In addition, some importers are weighing the decision to bring forward some goods, particularly from China, that could be impacted by rising tariffs following the election.”

U.S. ports covered by the Global Port Tracker handled 2.32 million Twenty-Foot Equivalent Units (TEU) in July, the latest month for which final numbers are available. One TEU is equal to one 20-foot container or its equivalent. The July number was up 8.1 percent from June and up 21 percent year-over-year (y/y) for the highest July on record.

Ports have not reported August numbers, but the Global Port Tracker projected the month at 2.37 million TEU, up 20.9 percent y/y and the highest level since the record of 2.4 million TEU set in May 2022.

September is forecast at 2.31 million TEU, up 14 percent y/y; October at 2.08 million TEU, up 1.3 percent y/y; November at 1.92 million TEU, up 1.6 percent y/y, and December at 1.89 million TEU, up 0.9 percent y/y. That would bring 2024 to 24.98 million TEU, up 12.3 percent from 2023. The first half of 2024 totaled 12.1 million TEU, up 14.8 percent y/y from the same period in 2023.

If the Global Port Tracker forecasts prove correct, 2024 will have seen seven months of import levels at or above 2 million TEU, the longest since 19 months through September 2022.

Global Port Tracker forecasted January 2025 at 1.96 million TEU, down 0.3 percent y/y.

The import numbers come as the NRF forecasted that 2024 retail sales (excluding automobile dealers, gas stations and restaurants to focus on core retail) will grow between 2.5 percent and 3.5 percent over 2023.

Image courtesy Port of Long Beach