Consultant’s Insight: US imports slow, nearshoring hurts China

U.S. imports are slowing as consumers return to pre-pandemic spending. After growing 21.3% in 2022 and 14.6% in 2021, total imports, in terms of value, declined 5.5% year to date through May compared to the corresponding period last year, according to the U.S. Census Bureau ’s USA Trade Online service. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] Total airfreight imports are faring worse, declining 10% year to date through May after growing annually by 7% in 2022 and 14% in 2021. The slowdown in imports comes as interest rates increase and fears of recessions spread. In addition, inventory glut hangovers persist for some retailers who found themselves with bulging warehouses last year. Still, consumers continue to spend on goods, but the amount appears to be returning to pre-pandemic levels after two years of strong retail spending. Year to date through May, retail sales were up 2.2% compared with 10.3% for the corresponding period in 2022 and 22.7% in 2021. Year to date through May in 2019, retail sales were up 2.1% before falling 2.4% in 2020, according to Census data. Diving deeper into the trade data, retailers’ diversified sourcing strategies appear to have impacted China’s exports to the United States. U.S. imports from China, in terms of the value of goods, have declined 24.4% year to date through May compared with the corresponding period in 2022 after increasing annually by 6.4% in 2022 and 16.6% in 2021. U.S. imports from China by air declined 29.8% year to date through May after increasing annually by 1.7% in 2022 and 12.7% in 2021. China’s strict COVID policy, which was finally lifted in late 2022, resulted in many delays and backups in retailers’ supply chains during the pandemic and caused inventory shortages. As such, retailers turned to additional countries to source goods. “We are making significant progress on our previously announced nearshore sourcing initiative to grow with existing and new supplier capabilities outside of China,” retailer Helen of Troy Ltd. Chief Operating Officer Noel Geoffroy told analysts July 10. “This will help us diversify geopolitical risk, enhance responsiveness and reduce inventory. These moves also create value as they can provide quicker transit times, greater speed to market, scale advantages and process standardization. “During the quarter, we implemented a major piece of our multiyear nearshoring strategy, successfully relocating some production of Hydro Flask bottles to the Western Hemisphere,” Geoffroy said. Mexico is expected to benefit from such shifts away from China. “The biggest impact is on northern Mexico,” property management firm Prologis Chief Executive Hamid Moghadam told analysts in April. “Those markets along the border are on fire. There is no vacancy, and we’re seeing a lot of nearshoring happening there as sort of a diversification move.” In addition to Mexico, DHL Supply Chain is betting on the rest of Latin America. “Around the world, companies are looking for more diversified strategies for their procurement and supply chain management by bringing their warehouses closer to their production and sales markets,” DHL Supply Chain Chief Executive Oscar de Bok said in a statement. “Accordingly, we see an ever-increasing demand for logistical support in Mexico, Brazil and other strategic markets in Latin America.” The company will invest $556 million in Latin America on logistics infrastructure to support what it calls “omni-sourcing,” locations close to major sales markets. “You cannot depend on one source,” de Bok said at a press conference this week. “That’s why I say [omni-sourcing is] different from nearshoring, which is only getting close to your end market. Always make sure that you design your supply chain with more than one sourcing point for the key components of your products.” Join Air Cargo Next for the second Air Cargo Tech Summit on Monday, Sept. 18, and Tuesday, Sept. 19, at the Brussels Marriott Hotel Grand Place in Belgium. For more information on the summit and to register, click here .

Consultant’s Insight: US imports slow, nearshoring hurts China

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