Port Data Show Inventory Boom – Or Bust? – Ahead Of Holiday Season

In the United States, imports are surging, indicating that retailers are getting ready to stock their (real and virtual) shelves in anticipation of the holiday shopping season.

As reported this week, the Port of Los Angeles processed more than 883,000 twenty-foot equivalent units (of cargo capacity) in September, up 13.3 percent from a year ago. That’s the busiest September and best quarter in the port’s 114-year history, according to a release.

“Despite unresolved questions about our nation’s health, economy and export strength, imports have improved significantly after a difficult spring,” said Port of Los Angeles Executive Director Gene Seroka.

At the same time, loaded exports from the port are down roughly 30 basis points year on year, indicating that the volume is decidedly one-sided.

Seroka told American Shipper that “we continue to see the replenishment of warehouse and distribution center inventories, along with retailers prepping for year-end holidays. After staying home much of the spring, consumers are buying again. Data from the National Retail Federation suggests that merchants are stocking up in anticipation of an early holiday shopping season,” he said.

And so: We have yet to see much in the way of retail earnings – and we’re not privy to the inventory builds that are taking shape (which would show up on balance sheets).

But to be ready to ship, to get to the last mile and to reach consumers’ doorsteps (or store shelves, assuming someday we will want to shop somewhere), the goods must be ready in the warehouse.

There are at least some encouraging data points hinting that the holiday season may see enough demand to make a dent in those warehouse holdings.

As reported in this space on Friday (Oct. 16), the latest reading of retail sales, released by the Commerce Department, showed a rise of 1.9 percent in September over August to reach $549.3 billion, outpacing expectations of a 70-basis-point rise. Measured year over year, that tally was up 8.2 percent year over year. Digging into the numbers, non-store retailers, including eCommerce activity, were up 23.8 percent from September, up about 1.6 percent from a year ago.

All of this signals that we’ve seen a few months of decent gains in retail spend, which means consumers are increasingly comfortable opening up their proverbial wallets and purses to spend. But if inventory is building at ports – and, by extension, will be waiting for end sales – there’s a bit of uncertainty thrown into the mix. That’s because goods being collected at portside in, say, September may see final sell-through until around Thanksgiving. There’s no guarantee that we won’t see continued economic pressures, or new pandemic waves eating into consumer sentiment, which would of course have a negative ripple effect on spending. The impact would be felt right down to the warehouse level, which means inventory would grow, for lack of a better term, stale.