For the first time in 10 years, imports fell two months in a row at the United States' three busiest ports, leaving some to wonder if this foreshadows a tough time for the American economy.
According to data from trade researcher Zepol Corp., the combined imports at Los Angeles, Long Beach and around New York harbor dropped by 10 percent between August and October. Those three ports represent over half the goods that enter the U.S. by sea.
Particularly disturbing is that the falloff in imports coincided with peak shipping season when the bulk of cargo rushes through the economy. High import volume tends to be associated with a confident outlook on the economy among retailers and manufacturers. Quiet ports often point to slowdowns.
The question economists are asking now is whether the peak season slump signals short-term issues or bigger underlying weaknesses. Some are concerned that the low imports signal coming slow growth, while others point out that the slow ports are more likely than not yet another symptom of the massive inventory buildup from earlier in 2015 that has acted as a massive anchor on the U.S. economy in the back end of the year.
The confusing picture is further muddled by the fact that despite the recent slowdown, the nation's busiest ports on the whole are up 4 percent.
“There was a little bit of overdoing it in the beginning of the year,” said Ethan Harris, co-head of global economic research for Bank of America Merrill Lynch. “Once we adjust to it, I would expect that business picks up again, shipping picks up again, container imports should pick up again.”
Some companies, including FedEx and Amazon, are predicting a record holiday season. But right now trucking and rail freight firms are bearing the brunt of a year without peak, facing massive losses and sagging demand during what is generally their busiest season.
Apart from the still unwinding inventory issue, consumer demand for goods has been less robust than expected, particularly given rising wages and falling gas prices.
“Instead of taking that extra money that [low fuel prices] are generating and going on a shopping spree, consumers are being more conservative,” said Rosalyn Wilson, a supply chain analyst with Parsons Corp. “It’s bad for the global economy because it means we’re not purchasing.”
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