NRF, Hackett Associates Raise Retail Import Growth Forecast

February expected to grow 20.4%, but higher shipping costs could be on the horizon

Subscriber: Log Out

U.S. retailers expect import growth through the first half of 2024 despite continued delays at the Suez Canal and terrorist attacks on ships in the Red Seas, according to the Global Port Tracker report released by the National Retail Federation and Hackett Associates.

The Global Port Tracker (GPT) predicts U.S. imports will increase 20.4% year-over-year in February compared to the 13.8% increase predicted in last month’s report. The tracker also increased the year-on-year gains for March (up 5.5% vs. 4.7%), April (up 2.6% vs. 0.2%), and May (up 0.3% vs. a decline of 0.8%).

About 12% of U.S.-bound cargo comes through the Suez Canal, and while the impacts will continue to bring volatility and uncertainty to supply chains, NRF Vice President for Supply Chain and Customs Policy Jonathon Gold said U.S. retailers are working to mitigate these impacts and increased costs.

He adds that the longer the disruptions occur, however, the bigger the impacts could be.

“More needs to be done among partners and allies to ensure the safety of vessels and crews in order to avoid yet another year of supply chain disruption,” said Gold.

Mitigation strategies at play

One strategy carriers have adopted is using a surplus of capacity built up during the pandemic to ease the impact as voyages are diverted around the Cape of Good Hope or to the U.S. West Coast.

“The shipping industry has rapidly adjusted by adding extra vessels to its networks, and has returned to normal weekly ship arrivals,” said Hackett Associates Founder Ben Hackett. “Service from Asia to the U.S. East Coast is working well, and the dramatic rise in freight rates is showing signs of easing, with pressure from shippers likely to quickly bring these down.”

In prepared testimony for the House Subcommittee on Coast Guard and Maritime Transportation, Gold said NRF members are also encouraging earlier shipments, working with overseas suppliers to ensure back-to-school and holiday shipments.

In addition to rerouting shipments, some retailers are shifting to air cargo for more sensitive and timely shipments. Air cargo volume and rates from China surged in the final week before Lunar New Year, but Cathy Morrow Roberson reports in her Freight Forward newsletter that “there is still no clear differentiation between seasonal demand and a Red Sea-driven shift from ocean.”

Questions arise around rising freight rates

While many retailers and other shippers are still under their yearly ocean contract and can work with the carriers on rate increases and surcharges, retailers are now entering the cycle for new contract negotiations. Gold said many NRF members are concerned about the impact of long-term disruption on the next ocean freight contract.

In testimony before the Federal Maritime Commission (FMC), Retail Industry Leaders Association (RILA) Director of Supply Chain Policy Sarah Gilmore urged the FMS to reconsider price increases from carriers.

“Questions persist regarding the direct correlation between surcharges and the tangible costs associated with avoiding the Red Sea,” said Gilmore. “Taken together, if the Red Sea crisis persists for six months, the cumulative effect of surcharges is projected to result in tens of millions of additional costs for retailers.”

Gold added in separate testimony that “while many are focusing on the current impacts of the disruptions, the longer the attacks and disruptions continue, the more challenges that will be created. We believe the federal government needs to start paying attention to these issues now to help avoid significant congestion in the coming months.”

SC
MR

Retailers have generally navigated around the Red Sea cargo disruptions, but trade groups said costs will begin to rise even as they project a growth in imports. (Photo: Getty Images)
Retailers have generally navigated around the Red Sea cargo disruptions, but trade groups said costs will begin to rise even as they project a growth in imports. (Photo: Getty Images)
Latest Podcast
Talking Supply Chain: The evolving retail fulfillment operation
GreyOrange CEO Akash Gupta joins the Talking Supply Chain podcast to discuss warehouse automation, retail customer demands, and the role of the…
Listen in

About the Author

Amy Wunderlin, Site Contributor
Amy Wunderlin's Bio Photo

Amy Wunderlin is a freelance supply chain and technology writer. She has written for several weekly and daily newspapers, in addition to trade publications such as Supply & Demand Chain Executive, Food Logistics and Building Operating Management, among others. She is a 2013 graduate of the University of Wisconsin-Whitewater, where she earned her B.A. in journalism.

View Amy's author profile.

Subscribe

Supply Chain Management Review delivers the best industry content.
Subscribe today and get full access to all of Supply Chain Management Review’s exclusive content, email newsletters, premium resources and in-depth, comprehensive feature articles written by the industry's top experts on the subjects that matter most to supply chain professionals.
×

Search

Search

Sourcing & Procurement

Inventory Management Risk Management Global Trade Ports & Shipping

Business Management

Supply Chain TMS WMS 3PL Government & Regulation Sustainability Finance

Software & Technology

Artificial Intelligence Automation Cloud IoT Robotics Software

The Academy

Executive Education Associations Institutions Universities & Colleges

Resources

Podcasts Webcasts Companies Visionaries White Papers Special Reports Premiums Magazine Archive

Subscribe

SCMR Magazine Newsletters Magazine Archives Customer Service