The current United States supply chain landscape is being squeezed from all ends. Recent data indicates that imports and exports through our busiest ports have plummeted. The Port of Los Angeles is projecting an eventual 15% to 20% decline in container imports from Asia over the next few weeks. Seattle is not the only port seeing these unexpected, dramatic declines. According to the most recent statistics from Vizion, we saw an astonishing 43% decrease in container volumes from April 21 to April 28. This steep drop further intensifies the inventory struggles for most retailers.
Indeed, right now, retailers are handcuffed by poor inventories. According to the first estimates, they are down to only one to two months of their sales stock on hand. Gene Seroka, executive director of the Port of Los Angeles, noted that retailers currently possess about five to seven weeks of full inventory left. This already tenuous state of affairs has sparked fears of imminent shortages as the summer’s start draws near.
Statistics from every port paint a dismal picture. Even the Port of Oregon suffered a staggering 51% decline in exports. The Port of Tacoma experienced an impressive 28% drop. The Port of Los Angeles is suffering from an unprecedented decline in exports, down more than 17%. At the same time, the Port of Savannah and Port of Norfolk have experienced even greater drops at -13% and -12% respectively. The Port of Houston and Port of Seattle have both recently reported similar declines, down 3% and 3.5% respectively.
While the continuing impact of trade tariffs has played a major role in these declines. It hasn’t helped that since the introduction of tariffs in early April, Matson has seen its container volume drop 30% year-over-year. The impact is clear, as seen not only in import statistics but the state’s aerospace workforce. Captain Kipling Louttit stated that workers “will be out of work because of the decline in cargo arrivals,” highlighting the human impact of these economic shifts.
Under typical circumstances, the Port of Los Angeles would expect to welcome 17 ships in a three-day stretch. This type of big ship activity has the port in a constant state of activity. Just 14 ships made it in during last week’s tracking period. What’s worse, only ten are actually slated to be received over the next three days. This extreme dichotomy shows a continued overall slowdown in maritime-related activity, making already-existing supply chain problems worse.
A number of companies are changing their approaches to minimize exposure to risks from supply chain disruption. Matt Cox remarked that many customers have shifted to a “China plus one” strategy to diversify operations, a trend he anticipates will continue. “We will continue to follow our customers as they reposition and expand their manufacturing footprint in response to changing tariffs as part of our ‘catchment basin’ strategy in Asia,” he added.
According to industry experts, retailers should be doing everything they can to ensure expedited actions to shoring up their supply chains. Tim Robertson emphasized that “retailers that lock capacity now, especially in fast-moving sectors like toys, consumer electronics, and fashion, give themselves the runway to fine-tune assortments later without racing the clock.” This forward-thinking approach could be key as supply levels continue to be highly unstable.
Kyle Henderson noted, “We haven’t seen anything like this since the disruptions of summer 2020,” drawing parallels between past supply chain issues and current challenges. Bank of America has weighed in on the situation, stating, “We think it is possible retail inventories may actually look ‘lean’ in coming months,” suggesting a potential crunch ahead for consumers.
With import and export figures dropping every month, all stakeholders across the supply chain need to keep an eye on these changes. How this combination of tariffs, levels of shipping activity, and port inventory management plays out will be key in determining the experience U.S. retailers and consumers have.