Dive Brief:
- Imports coming into major U.S. ports hit a five-year low mark, according to estimates from the latest Global Port Tracker report released by the National Retail Federation and Hackett Associates.
- NRF projections show imports will stay "significantly below normal levels through early summer as the coronavirus pandemic continues," the industry group said in a press release.
- Estimates of containers coming into the U.S. in March were down more than 21% year over year in March. Containers bearing imports are projected to be down 17.6% in April., 20.1% in May and 21.4% in June, and remain down by double digits through the rest of the summer.
Dive Insight:
The COVID-19 pandemic has been a double blow for imports and retail as an industry, disrupting supply chains overseas, especially in China where the virus shut down a major manufacturing hub earlier this year, and by sinking demand for discretionary goods in the U.S.
"Even as factories in China have begun to get back to work, we are seeing far fewer imports coming into the United States than previously expected," NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a press release. "Many stores are closed, and consumer demand has been impacted with millions of Americans out of work."
Hackett Associates Founder Ben Hackett noted that the spread of the novel coronavirus has closed large swaths of both the service and manufacturing industries. "The largest drop is forecast for the first half of this year but with uncertainty about the length of the lockdown and extent of the pandemic, the second half may not be in better shape," he said.
And while manufacturing in China is ramping back up after the pandemic hit the country, it is spreading in the U.S., Europe and elsewhere, slowing production in the U.S. and and abroad.
Of course, tens of thousands of stores have closed across the U.S. in an effort to slow the virus' spread, and e-commerce does not appear to be replacing much of those lost sales for those retailers. The need for inventory has plummeted as retailers focus on merely staying afloat financially, with uncertainty about when it will be safe to re-open stores and whether customers will feel safe returning, or feel financially secure spending with a major recession looming.
That leaves retailers with a complicated set of decisions to make around inventory they may already have. As one example, PVH, owner of the Calvin Klein and Tommy Hilfiger brands, said it may "pack and hold" at least some of its spring and summer inventory — potentially for a year — to preserve its ability to sell at full price or close to it. Others, such as Macy's and J.C. Penney, have reduced or canceled inventory purchases.
