August U.S.-bound shipments see another month of declines, reports S&P Global Market Intelligence

United States-bound containerized freight imports were down in August, according to data recently issued by S&P Global Market Intelligence.

August imports, at 2.88 million TEU (Twenty-Foot Equivalent Units), were down 12% annually, and were ahead of July’s 2.53 million TEU and June’s 2.43 million TEU. This marked the 13^th consecutive month of annual declines. On a year-to-date basis through August, imports are down 14.8% annually, at 18.82 million TEU.

S&P Global Market Intelligence observed that the August import decline is “indicative of slowing supply chain activity more broadly at the start of the traditional peak shipping season.”

Looking at specific import segments, the company said that consumer discretionary goods again paced declines, with apparel imports, including lower back-to-school products, were off 22% annually. And shipments of leisure goods, including toys and fitness, were also off 22%, and consumer electronics were down 14%. What’s more, S&P Global Market Intelligence said that apparel, home goods, and electronics shippers have indicated weak demand over the remainder of the year, coupled with an ongoing destocking process.

While consumer goods shipments remained down annually, S&P Global Market Intelligence noted that the pattern of seasonality in consumer goods shipments ostensibly has reverted back to 2016-2019 pre-pandemic peak season patterns, with total August imports up 5% compared to July, following a 1% sequential increase from June to July, with the level of shipments close to average 2016-2019 levels.

On the industrial side, capital goods shipments were off 5% annually in August, following a 1% July increase it said, as weaker imports of building materials and mechanical equipment offset stronger electrical equipment shipments. S&P described the industrial demand outlook as “poor,” citing how the S&P Global Purchasing Managers Index for manufacturing showed falling new orders, order books, and quantities purchased. And it also said that, for purchased products and finished goods, the destocking process remained intact for the fifth consecutive month in August.

Chris Rogers, Head of Supply Chain Research for S&P Global Market Intelligence, said in an interview that the August numbers are in line with what the data has been indicating throughout 2023, in that the main area of weakness remains consumer goods, whether it be consumer electronics or home furnishings, leisure goods or apparel.

“They're all down double-digits percentage-wise year over year, in August as they have been throughout the year so that that destocking process has shown very little sign of slowing down,” he said. “However, it is important to note that it was September of last year when the wheels began to come off the wagon.”

What happens, in terms of shipments, in September and October, he said, will provide a better sense of how the fall peak plays out, he added.

“An important point to note is that the non-seasonal sectors are also not doing particularly well,” he said. “Consumer staples which includes food and health care, are down by about 8%. If we take a look at materials, which is made up of chemicals, metals, and forestry products, those are down by 13%. Even the stuff that's not necessarily dependent which month it is still looks pretty weak. That is confirmed by the PMI data that we publish, showing that manufacturers are still pretty bearish.”

Looking at the 18.8 million shipments on a year-to-date basis through August, Rogers said that less than one-third, or 5.44 million TEU, is comprised of consumer goods.

“That shows that most of the stuff we are worrying about is related to seasonality versus other stuff,” he said. “That's why you get that kind of more kind of downbeat overall picture.”

As for the remainder of 2023, Rogers explained that if the first two months of the third quarter are bad, September might be flat, removing expectations of a major rebound.

“Even if there is a bounce back versus last year, things would only still be back to where they were around four years ago,” he said. “We have been talking all year about stabilization. It is going to be the fourth quarter where we will see the evidence of what normal looks like. I am still seeing too many retailers talking about cutting inventories into the latter part of the year, due to being uncertain about consumer demand. And there is still this negative sentiment in the manufacturing sector. None of that really points to a booming fourth quarter.”