The recent resurgence in inflation isn’t the only economic indicator showing a rebound. Imports from China to the U.S. are notably increasing, driven by the reopening of manufacturing plants after the Lunar New Year. Despite new supply chain challenges, inbound cargo volume at major U.S. ports is expected to exceed two million units by May, marking the first time since last fall. This surge is part of a broader trend: imports for the first half of 2024 are projected to increase by 11% compared to the same period last year, following a decrease of almost 13% in 2023.

The trade data signals a robust consumer-based economy, with U.S. imports rising despite disruptions at U.S. ports. Despite challenges like limits on the Panama Canal due to drought, trade diversions from the Red Sea attack, and the recent shutdown of the Port of Baltimore, retailers are adjusting shipping plans to ensure cargo flows smoothly. While the collapse of the Francis Scott Key Bridge has limited impact nationally, it underscores the need for flexibility and resilience in supply chains.

Although the Port of Baltimore isn’t among the largest container ports on the East Coast, port diversions and increasing consumer imports are affecting supply chain prices. Drayage prices in Norfolk have risen sharply due to increased demand for container movement, and similar trends are observed in New York/New Jersey. This unplanned surge in demand is expected to drive up dray trucking rates, potentially leading to long-term effects like the migration of transpacific freight to West Coast ports.

Rail-bound containers are also experiencing challenges, with the imbalance between container volumes and available rail chassis causing delays in container movement. The increase in eastbound freight coming into the Ports of Los Angeles and Long Beach further exacerbates this imbalance.

Despite concerns about inflation, driven partly by rising goods prices, the strong U.S. dollar is supporting increased purchasing power for importers. Federal Reserve officials remain cautious about inflation but still anticipate interest rate cuts. The recent increase in seaborne imports, particularly in containerized freight, suggests continued economic expansion, though caution is advised given the context of inventory reductions in the prior year.

 Inspired by: https://www.cnbc.com/2024/04/10/imports-from-china-to-us-are-rising-at-highest-rate-since-last-fall.html