Expect a recovery in goods imports from Asia to the US in the second half of 2023

After the Covid-19 pandemic was brought under control, goods imported into the US have decreased markedly since the second half of 2022 to settle inventories. This situation is still extending into the second quarter of 2023. This leads to forecasts of a substantial recovery in US retail imports in the second half of 2023. Weak US housing demand; retail price slippage; and still too much apparel, homeware, and furniture clogging up warehouses are bad signs for expectations of a fresh replenishment for the back-to-school season and winter break. High unemployment in the US due to rising interest rates and financial market turmoil is challenging consumer confidence to a degree not seen in the past three years, economists expect.

U.S. retail demand steadily increased to hit a nearly 16-month high in July 2020. This record retail sale was boosted by pandemic lockdowns and federally stimulated wages. As a result, Asian imports were kept above 1.4 million TEU monthly for 26 of the 27 months ending October 2022, according to PIERS.

According to Jason Miller, an associate professor of logistics at Michigan State University and an analyst for Commerce Magazine, which reports from some of the largest retailers on quarterly seasonally adjusted arrivals, they have significantly retracted the order. Dick’s Sporting Goods says it has received fewer orders since the second quarter of 2022, while Walmart began to significantly reduce inventory taking in early 2022. It’s also worrying that retailers of home appliances, furniture, and building materials are facing inventory levels not seen in a decade, Miller added. According to the US Department of Commerce, single-family construction activity in the United States began a slight recovery of 1.1% in February after five consecutive months of decline. Americans seem to have lost interest in projects to build new homes and plant trees in the backyard. The inventory-to-sales ratio of building materials, garden equipment, and supplies was 1.96 in January compared to 1.7 in February 2020. In addition, the removal of petroleum products from the US Census data shows that wholesalers generally also have too much inventory.

While high inventories and widespread economic warnings may suggest weakening import growth in the US, the possibility of a US consumer recovery cannot be ruled out. U.S. retail and food service sales may have fallen 0.4 percent in February from a year earlier, but “not enough to signal a serious decline in consumer willingness to spend” said Oren Klachkin, lead US economist at Oxford Economics. Luiz Gosling, senior vice president of consulting firm AlixPartners, also said, during a March 20 webinar. Organized by Stifel says there is bound to be some rebound from the inventory cuts as much of the US economy is driven by consumption.
“Forgetting about supply for a second, how much more depression can demand to get, until we start to see inventories recover both on the retail side and on the industrial goods side — as we approach late Q3 ’23 and Q4 ’23, or perhaps early in August or September this year?,” he said.

Marine analyst, Lars Jensen, outlined at Trade Journal’s TPM23 conference three scenarios for the trans-Pacific. First, a “strong peak season” could happen in July, August, and September this year. However, he cautioned that there is still a risk of a collapse in US consumption, which could then combine with a shift from goods to services and lead to the second that demand will not increase and it will not increase until before the 2024 Lunar New Year when they have exhausted their inventory. In that case, the market will be very bad for the whole of 2023. The last scenario is that the container shipping lines will decide that the price war won’t stop and they chase the market to the end, believing they had enough money from more than two years of record profits to withstand the loss rate.