Imports Surge at U.S. Ports as Companies Brace for New Tariffs
November 15 2018 - 3:08PM
Dow Jones News
By Erica E. Phillips
LOS ANGELES -- Imports into U.S. seaports are surging over usual
seasonal patterns in an apparent push by retailers and
manufacturers to pull orders forward ahead of a new round of
tariffs set to hit U.S.-China trade in January.
Ports in Southern California, Georgia and Virginia reported
double-digit growth in import volume from September to October,
setting monthly records as furniture, apparel, auto parts and other
goods streamed in.
"It's going fast and furious," said Alan McCorkle, senior vice
president with Yusen Terminals LLC, a container-handling operation
at the Port of Los Angeles. "October was just pumping."
The neighboring ports of Los Angeles and Long Beach, the
nation's top hub for container trade and the main destination for
imports from China, handled a combined 849,908 20-foot equivalent
units, or TEUs, of loaded inbound containers last month. That was
up 17.7% from the same month last year and 10.2% from
September.
Mr. McCorkle said Yusen has opened an additional entry gate for
trucks coming to handle the latest wave of imports. Container
stacks on the terminal are "five- or six-boxes high, where normally
it'd be four," he said.
Goods affected by tariffs in particular appear to be moving.
Trade analyst Chris Rogers of the Panjiva research group said
imports of apparel rose 19.7% year-over-year in October. Furniture
imports were up 14.7%, and auto-parts imports rose 9.9% last month
compared with a year ago.
The surge follows a slight lull in Southern California during
the normally busy months of July and August, after an earlier round
of tariffs kicked in. But port officials and logistics companies
said they expected another rush before the end of the year, with a
new round of tariffs slated to go into effect Jan. 1.
October's import activity proved them right.
On the East Coast, container ports in Norfolk, Va., and
Savannah, Ga., reported swells in October imports. The Port of
Virginia said loaded imports rose 17% to 127,677 TEUs from
September to October. In Georgia, import cargo was up 18.5%
month-to-month, reaching 205,836 TEUs.
Additional ocean vessels have been added to trans-Pacific
routes, and some ocean shipping companies are sending larger ships,
analysts with Citigroup Global Markets Inc. wrote in a research
note last week. Citi added that companies including Costco
Wholesale Corp., Floor & Décor Holdings Inc., Lumber
Liquidators Holdings Inc., and Eaton Corp. PLC have said they
planned to pull forward their import volumes to get ahead of
tariffs.
Advancing orders early carries direct and potentially indirect
costs for retailers and manufacturers. Companies will have to hold
inventories longer, and the longer lead times mean retailers could
be stuck with extra products that don't sell.
Executives at Walmart Inc. said on a recent call with reporters
they are reviewing every item expected to be subject to
tariff-related increases in the coming months, and discussing with
suppliers ways to reduce costs.
Meanwhile, shipping companies are bracing for a potential
drop-off in demand once the calendar flips.
A.P. Moeller-Maersk AS Chief Executive Soren Skou said the
U.S.-China trade dispute has boosted the flow of goods on the
company's ships, but he expects demand to decline early in 2019
after more tariffs are expected to go into effect. If the U.S. and
China resolve their differences, he said, companies could start
destocking, or selling off existing inventories, while scaling back
new orders.
Write to Erica E. Phillips at erica.phillips@wsj.com
(END) Dow Jones Newswires
November 15, 2018 14:53 ET (19:53 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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