NRF: Coronavirus could cause 13% import drop at US ports

Dive Brief:

Major U.S. ports could see a nearly 13% drop in containerized retail imports in February, down to 1.41 million TEUs, due to extended production shutdowns caused by the coronavirus outbreak in China, according to the National Retail Federation's Global Port Tracker.
Before the outbreak, the tracker predicted February imports would be 1.54 million TEUs and March imports would be 1.7 million TEUs. March import figures are now predicted to drop to 1.46 million TEUs, a decline of 9.5% year-over-year (YoY). The tracker predicts imports could see a 4.5% YoY uptick starting in April.
"It’s questionable how soon manufacturing will return to normal, and following the extension of the Lunar New Year break all eyes are on what further decisions China will make to control the outbreak," Hackett Associates Founder Ben Hackett said in a statement.

Dive Insight:

February is typically a slower import month due to a post-peak slump and traditional Lunar New Year holiday production stoppages in China. The coronavirus outbreak, which extended the holiday, could exacerbate and extend the slowdown.

The longer-term impact of coronavirus-related trade disruptions "depends on whether governments take more aggressive steps to curtail commercial traffic from Wuhan and elsewhere," particularly for West Coast ports, Peggy Dorf, the senior market analyst at DAT Solutions, told Supply Chain Dive via email.

An asterisk indicates forecasted imports. Data includes U.S. ports of Los Angeles, Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast; and Houston on the Gulf Coast.

Morgan Forde / Supply Chain Dive, data from the National Retail Federation

"This is an unusual situation," NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. "U.S. retailers were already beginning to shift some sourcing to other countries because of the trade war, but if shutdowns continue, we could see an impact on supply chains."

Chinese public health officials prevented Foxconn, a key Apple supplier, from resuming production at its Shenzen facilities as scheduled on Monday after finding they were high-risk sites for coronavirus infection. Some operations at Foxconn's central plant in Zhengzhou resumed Tuesday. Apple also extended closures of stores and offices in the region.

"Our latest survey indicates that the iPhone supply is being affected by the coronavirus and, therefore, we cut the iPhone shipment forecasts by 10% to 36-40 mn units in 1Q20," TF International Securities analyst Ming-Chi Kuo, who focuses on Apple, wrote in a research note obtained by CNBC.

Eighty-seven percent of U.S. companies with operations in China expect the outbreak to negatively affect revenue, according to a survey conducted by The American Chamber of Commerce in Shanghai. Of that number, 24% expect declines of 16% or more.

Container lines have lost upwards of $350 million and over 350,000 boxes have been removed from global trade lines since the coronavirus outbreak began last month, according to data from Sea-Intelligence cited by The Wall Street Journal.

When production does pick up again, it will take time to ramp up as facilities work through a backlog of orders and transportation networks come back online after regional quarantines lift. In the meantime, experts recommend supply chain managers attempt to mitigate the disruption as best they can by preparing and vetting alternate suppliers to keep production moving as much as possible.