News / US retail inventories hit new heights, and probably caused early transpac peak

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In a warning to container shipping lines serving North America that the hitherto strong demand cannot continue indefinitely, new data from Sea-Intelligence Consulting suggests US retail inventories may be reaching a peak.

“The latest data from the US Census Bureau shows there is a consistent inventory increase in the retail sector,” Sea-Intelligence Consulting chief executive Alan Murphy said.

“Not only are retailers increasing inventories, the pace of increase has also quickened,” he added, explaining that over the course of 2024, retail inventor growth in the US has far exceeded the normal long-term trend.

“It is evident that inventories are beginning to exceed the trend line,” he said. “In fact, in absolute terms, the deviation has,in August 2024, reached a point where the retailers’ inventories are $26bn higher than what can be accounted for by the normal trend development.”

And he noted that the inventory build-up during July and August this year amounted to the “largest deviation we have seen since the financial crisis”, and was likely to be the root cause of the early peak season this year on the transpacific trades.

Source: Sea-Intelligence Consulting

“Not only are retailers building inventory, but they are building inventory which is excessive compared with the long-term trend.

“It is therefore beginning to emerge that the early onset of the peak season has been driven by retailers moving-in products earlier than they were being sold,” he said, and warned that the rate weakness on trades into the US, seen since the summer, would likely continue.

“If this is the main driving cause, it would also imply a subsequent sharp drop in imports – which indeed tallies with the market developments shown in spot rates on the transpacific since the peak in mid-July,” Mr Murphy said.

This assessment chimes with new US port throughput figures for September, as recorded by liner analyst John McCown this week.

“The 10 largest US ports showed a 10.9% year-on-year gain in inbound volumes in September,” he said. “While strong, that is well off the pace of the last three months and below the year-to-date metric.

“September was sharply below the 19.5% gain in August,” he added.