Imports Through Long Beach Jump 26%
Inbound cargo at the Port of Long Beach surged 26% in May, port officials said Tuesday, offering concrete evidence that bullish consumer spending continues to push the U.S. trade deficit wider.
Trade experts say the jump over a year ago, and a 13% increase over April, signals a turnaround in thinking among retailers who earlier this year decided to shrink their inventories in part over fears that consumer spending would slow as the economy cooled.
“People were being cautious with their inventories, but sales kept going and going with no end in sight,” said Robin Lanier of the International Mass Retail Assn., a Washington-based advocacy group for big retailers such as Kmart and Wal-Mart.
In their rush to restock, and despite a jump in shipping costs of up to 45% this spring, retailers helped propel import levels at Long Beach, the nation’s busiest port, to 205,639 cargo containers, an increase of 24,000 units over the year’s previous high set in April.
Port spokesman Hal Hilliard said officials had been disappointed with import levels in March and April and he laid partial blame on attempts by retailers, especially in the Midwest, to secure low storage tax rates by keeping their inventories small.
Warehouse space now, however, could be at a premium, Lanier said, as retailers stock up for what they hope will be brisk late-summer and early-fall sales seasons. “They are expecting a better back-to-school than they had been planning for earlier,” she said.
Lanier also attributed May’s year-over-year increase to the return to Long Beach of some importers who early last year had diverted shipments to other ports because of delays along the Union Pacific’s rail lines in Southern California.
The May cargo rush came about the same time shipping fees jumped. Steamship lines pushed through the increases after complaining for years that the previous rates left them with slim profit margins.
As a result, some customers of Long Beach-based Western Overseas customs brokerage, for instance, are paying as much as $300 more to ship a 20-foot container, company President John Peterson said. “They complain a lot about it. They don’t have a whole lot of choice.”
In some cases, importers have yet to feel the sting of the fee hike, Lanier said, because their shipping contracts were negotiated before the increase took effect. But those who have been affected, she said, appear to have absorbed the hike rather than pass it on to buyers or consumers.
Despite the fee increase, Hilliard predicted June could also be another strong month for imports. June traditionally marks the start of the port’s peak shipping season, and this year promises to be busier than usual, he said. By month’s end, five shipping companies are scheduled to have launched new transpacific runs between the port and Asia to take advantage of Asia’s continued export push.
Currency devaluations have made Asian goods cheaper--and therefore more attractive--to U.S. consumers. On the other hand, a strong U.S. dollar has priced goods made here beyond the reach of most Asians. As a result, U.S. export rates remain low despite modest growth in cargo leaving Long Beach in May. The number grew nearly 4% to 87,553 containers but still trailed imports by nearly 2 to 3.
Those figures help explain the growing U.S. trade deficit. In March, it hit a record $19.7 billion--the third record in a row. Trade figures for April are due to be released Thursday, and economists predict the imbalance to widen.
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Bulking Up
A surge in inbound cargo at the Port of Long Beach, the nation’s busiest, reflects U.S. retailers’ stocking up on inventory to satisfy strong consumer demand. Monthly imports, in numbers of cargo containers:
May: 205,639 containers
Source: Port of Long Beach
