A surge of imports into the U.S. economy shows little sign of slowing down, clogging American ports and highlighting ways the pandemic is still causing imbalances in the global recovery.
Consider the number of inbound shipping containers through the 10 largest U.S. ports. They rose 12.5% in January from a year earlier after a 23% surge a month earlier and a 25% jump in November, according to data compiled by John McCown, an industry veteran and founder of Blue Alpha Capital.
But American exports have seen no such boom: The volume of outbound containers fell 7.6% in January from a year ago, the 12th straight drop.
The divergence was apparent in Commerce Department figures last week showing the nation’s merchandise trade deficit expanded to $83.74 billion in January, the second-widest in records back to 1989, as the value of imports hit a new peak.
It doesn’t appear to be abating either, with ocean-bound cargo still pouring into the U.S., even during the typically slower weeks after the Lunar New Year holiday in Asia.
According to a tally released Monday by Hapag-Lloyd AG, Germany’s biggest shipping line, a total of 60 container carriers were anchored outside the ports of Los Angeles, Long Beach and Oakland in California, and Savannah, Georgia, on the East Coast — little changed from the backlog at those four gateways two weeks ago.
The influx shows how the pandemic has muddied the historical connection between container shipping, which is booming, and the broader economy, which isn’t. While demand from American consumers underpinned by fiscal stimulus remains solid, and many U.S. companies attempt to warehouse more inventory to strengthen supply chains, other drivers of global economic activity like the services sector are still very sluggish.
“The decoupling is a reflection of how the ongoing recovery is K-shaped, where some parts of the economy have recovered much faster than expected, including container shipping, while other parts of the economy are still in the doldrums,” said Alan Murphy, CEO of Copenhagen-based analysis and data provider Sea-Intelligence.
“We’ve seen a growth in demand that’s not supported by any kind of economic indicators and is fast out-pacing retail consumption,” Murphy said.
The strength of U.S. imports is fueled almost entirely by what Murphy calls “pandemic commodities” — long-term durable goods like household appliances, furniture and office equipment, exercise and home-leisure products, as well as new everyday necessities like masks, soaps and disinfectants.
A realignment of container-shipping demand growth with broader macroeconomic fundamentals is “likely to happen when U.S. consumers can again shift their consumption back onto services,” he said.
Even if such a re-balancing occurs, executives who track the demand for shipping containers expect activity will remain solid into the second half of the year.
“We’re seeing kind of an unusual decoupling of economic growth, which is still down below pre-pandemic levels, and trade growth, which is now well above pandemic levels,” Brian Sondey, CEO of Hamilton, Bermuda-based Triton International Ltd., the world’s largest container leasing company.
“What we hear and what we see is that trade feels like it should be quite strong into the second quarter,” he said during a virtual conference last week.
“The third quarter typically is the peak season for shipping. That’s when retailers and wholesalers in the U.S. and Europe want to start stocking up their shelves in anticipation of Christmas,” Sondey said. “And so our general view is that, it should be pretty strong right through the summer.”
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