Letter from the Editor

By Mark Szakonyi

“ Global manufacturing output and global goods exports are turning up quite nicely .”

The improving US economic outlook is driving the return of Asia import growth , with macro and micro signs pointing to a stronger year for Asia – US trade than anticipated just months ago .

US imports from Asia have been rising on a year-over-year basis since October , with February volumes up more than 30 % from a year ago , according to early readings of PIERS data , when retailers and wholesalers were still destocking after an unprecedented import surge in 2021 and 2022 . Separately , US retailers in early March increased their forecasts for first-half import volumes for the second month in a row .

“ I think ... we could see physically on the terminals that since November , the imports have been picking up into the US and into the Canada gateways ,” Jeremy Nixon , CEO of Ocean Network Express ( ONE ), said during the Journal of Commerce ’ s TPM24 conference . “ I was actually out on the terminals [ in Southern California ] yesterday , and you could see that the terminals are already working at quite high utilizations .”

Strong US employment , record-high wages and a rising housing market are driving imports . Importers , according to Nixon , are getting over their overstocked “ big hangover ” and have “ punched [ their way ] through ” what he likened to 18 months of indigestion . He said the automotive sector looks strong for this year and next , and so do cargoes tied to decarbonization , ranging from solar panels to electric vehicle components .

Rising economic tide

Fiscal loosening as inflation eases yet still hangs over the economy is pushing the US toward a so-called softer economic landing , brightening the prospects of stronger import growth . Journal of Commerce parent company S & P Global recently lifted its forecast for US real gross domestic product ( GDP ) because the economy has exceeded expectations in early 2024 , said Chris Williamson , chief business economist for S & P Global . US GDP this year will expand at a 2.4 % clip , rather than the original forecast of a 1.7 % uptick , according to S & P Global .

“ There are very few signs of recessions becoming imminent in the US or elsewhere ,” Williamson said during TPM24 .

Globally , factories are finally revving back to pre-pandemic production levels . An index measuring the upstream supply chain from manufacturing lines shows that demand for raw materials , commodities and components is recovering .

The February reading of the GEP Global Supply Chain Volatility Index showed an essentially flat reading of 50 , resulting in a 10-month high for the barometer created by procurement software provider GEP with S & P Global ’ s help .

While the growth of financial services is leading the muted global economic recovery , manufacturing is starting to show strength , Williamson said . In February , S & P ’ s global manufacturing purchasing managers ’ index ( PMI ) hit an 18-month high and notched its first growth since August 2022 .

“ Global manufacturing output and global goods exports are turning up quite nicely ,” Williamson said . “ Trade and exports are showing signs of stabilizing .”

As was the case during the pandemic-driven import boom , US consumers are the hungriest for goods coming off the assembly line . The National Retail Federation ’ s Global Port Tracker has upgraded its expectations for US imports through the first half of 2024 . US imports for the first six months of the year are now expected to rise 7.8 % compared with the first half of 2023 . That ’ s a significant revision and the second in as many months ; retailers in February were expecting more modest growth of 5.3 %.

Here comes the capacity

The volume projections from US retailers appear to be resonating with container lines . Asia outbound vessel capacity is rising to make more room for spring clothing , furniture for new homes and whatever outdoor furniture wasn ’ t snagged during the pandemic . Ocean capacity between Asia and the US in March and April will rise roughly 22 % to well over 1.3 million TEUs each month compared to deployments in January and February , according Drewry Container Capacity Insight , which bases forecasts on announced carrier sailings .

US consumers may be more sensitive to prices as inflation continues to drag , with even wealthy big spenders picking a more modest Rolex and the rest of us tilting toward generic goods , but , ultimately , we ’ re still spending . Adjusting to price inflation , US consumers spent nearly 30 % more on durable goods in the fourth quarter of last year than in pre-pandemic fourth quarter 2019 , according to the Organization for Economic Cooperation and Development . Betting against upward import growth this year — and against the resilience of the US consumer — looks unwise .

email : mark . szakonyi @ spglobal . com

4 Journal of Commerce | March 25 , 2024 www . joc . com