As retailers manage excess inventory, import levels fall

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Diving Brief:

  • By the end of 2022, imports into major U.S. container ports are should fall to their lowest point in nearly two years, according to the monthly Global Port Tracker report from the National Retail Federation and Hackett Associates. It comes as retailers reduce projections and eliminate inventory.
  • In August, US ports covered by the tracker handled 2.26 million twenty-foot containers or their equivalent, a 3.5% increase from July, but a 0.4% decline from a year ago. The year-over-year declines are expected to increase over the coming months, with units projected in September down 3% from a year ago and those in October down 9.4%.
  • The report predicts US ports will handle 2.01 million units in November and 1.96 million units in December, representing declines of 4.9% and 6.1%, respectively.

Overview of the dive:

Although imports are down, retailers are dealing with an overflow of inventory. Nike, for example, said its North American inventory increased by 65% in the first quarter, which hits gross margins, as multiple seasons of inventory landed at the same time. Nordstrom is another retailer discounts on its products and elimination of inventory to welcome new articles.

For off-price retailers, the glut of inventory wasn’t really good news. Initially, off-price retailers hoped that the influx of inventory would have enabled them to buy more goods at lower prices and take advantage of subsequent price increases. But retailers keep their inventory and mark it themselves. Burlington CEO Michael O’Sullivan said during the company’s second quarter earnings call that the retailer is focused on finding optimal inventory levels and providing the ideal assortment of products for shoppers while reducing costs.

Analysts are also watching the impacts of inventory on retailers this holiday season, alongside a slowdown in consumer spending, which could hurt retailers’ sales forecasts.

“The holiday season has already started for some shoppers and with advance planning, retailers have plenty of merchandise on hand to meet demand,” said NRF’s vice president for supply chain. and customs policy, Jonathan Gold, in a statement. “Many retailers imported goods earlier this year to combat rising inflation and ongoing supply chain disruption issues. Despite declining volumes, retailers still face challenges throughout the supply chain, including U.S. ports and intermodal yards. »