U.S. Import Demand Has Collapsed

A container ship at the Port of Houston. (Photo: Jim Allen/FreightWaves)  

Freight Waves: US import demand is dropping off a cliff  

Inbound container volumes to the US are reverting to pre-pandemic levels 

The latest ocean container bookings data reveals that despite the strong levels of inbound cargo during the first five months of 2022, import demand is not just softening — it’s dropping off a cliff. Because capacity on the trans-Pacific has remained relatively stable, Freightos’ container spot rates from China to the West Coast have plunged 38% month-over-month to $9,630. 

Freight forwarders will enjoy expanding margins on ocean freight, while U.S. trucking carriers and intermodal volume providers may start to see volume risks. 

Consumer buying patterns are rapidly normalizing to pre-COVID levels, and U.S. retailers are stuck with too much inventory. Target (NYSE: TGT) shares dropped Tuesday morning after executives said the company would mark down unwanted items, cancel purchase orders and move quickly to get rid of excess inventory. 

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Update: US Trade Deficit Narrows Most on Record on Muted China Imports (Bloomberg)  

WNU Editor: Some Americans will cheer this news because it means the U.S. trade deficit will decease. But with oil prices rising and energy shortages increasing, I doubt this is going to last long. 

There is also a bigger problem/crisis coming. The stores are packed right now. Inventory levels are high, and everything looks normal. But it is not normal. 

These goods were manufactured six months to a year ago and are only being delivered now in what looks like a flood of materials. I have noticed in the box stores in my neighborhood the sales and deals that are being advertised. Everyone wants to get rid of their inventory. But when these current stockpiles have been depleted, the data says nothing is going to come in to replace it. There is nothing there to back up what is being sold.

And forget about China, the manufacturing center of the world to solve this. China is still in lock-down, albeit slowly opening, and I do not see any return to normal until Beijing decides to abandon its Covid policies. Your guess is as good as mine on when that will that happen. 

Bottom line. 

An economic downturn is coming and it is going to be incredibly painful for many who will not know what to do. Especially to those who have high personal debt levels. Expect shortages of most goods in the coming months. With inflation and high fuel costs making basic goods too expensive for most families to buy, I am expecting a lot of frustration and civil unrest. Tough times are coming, and none of us are going to be spared.