2021 in review: Keeping up with demand — Panjiva


2021 in review: Keeping up with demand

Outlook 92 U.S. 5260

2021 was a record year for U.S. imports, defying what many feared would be a trade recession at the start of the pandemic in 2020. Total volume increased by 15.0% year over year to 32,970,647 TEU, making up for the down year in 2020. About 2,666,164 TEU of the total were added in December, although growth had started to fall by then, down 0.5% on the year and 1.9% from November. Panjiva analysis shows that the slowdown aligns U.S. imports with the long-term trend seen in previous years, around 100,000 TEU over the trendline late in the year. This could be a sign that some amount of normalcy is returning. Alternatively, with imports similar to 2020 levels after removing the trend, 2022 could be more of the same, as discussed in Panjiva’s research of Jan. 11.

2021 imports get back to decade long trend

Chart shows U.S. imports above and below the trend since 2010 on a monthly basis. Source: Panjiva

Imports in 2021 were unseasonably high for most of the year, putting pressure on capacity and resulting in decreased levels of service. Importers faced lengthening lead times and shipping costs, coupled with rising shipping rates as they worked to get seaborne imports into the country.

Containers were one of these congestion flashpoints coming to a head last year. Containers are normally managed in the day-to-day running of carrier networks, but in 2021, imbalances in flows ended up leaving empty containers on the docks. This hit the Los Angeles and Long Beach ports especially hard, leaving yards jammed full of containers and subsequently slowing down operation. The problems were made more acute by container shortages earlier in the year that led to increased imports of empty containers when they were no longer needed. Panjiva data shows imports of empty containers increased by 175.1% year over year in 2021. Ports reacted by placing additional surcharges on carriers and increasing the maximum stacking height, measures that have started to address the issues.

Lead times suffered as a result, with congestion backing up shipments through logistics networks, compounded by additional factors like COVID-19 outbreaks, droughts, fires, shipping accidents, among other issues. Each of those events would already be significant on their own, but when occurring alongside an already strained system, they have outsized effects. Data on transit times from Flexport shows that eastbound shipments across the Pacific increased from 70.0 days at the end of 2020 to 106.0 days by Dec. 5, 2021, an increase of 51.5%. This doubling of lead times affected business decision-making, forcing companies to hold more inventory and plan farther ahead. The concerns made it to discussions among executives as well — Panjiva data tracking mentions of sourcing and procurement increased from 52.4% of earnings calls in December 2020 to 75.8% at the end of 2021

Transit times continue to mount

Chart shows days from shipment ready to departure from destination point on a weekly basis. Data provided by Flexport. Source: Panjiva

The shift in consumer preference towards durables also continued in 2021, still driven by increased time at home from pandemic-related precautions. The heightened focus on these durable goods may have overwhelmed logistics networks and potentially gave visibility to stockouts and shortages. It may have also contributed to inflation when compared with services — goods can suffer from scarcity easier than services that can theoretically scale up using more virtual or distributed resources. Panjiva seaborne import data broken down into industries and components shows this trend in action.

Consumer discretionary imports over the whole year increased by 20.3% year over year and by 23.1% compared with 2019, one of the highest growth rates aside from energy, which rose by 26.3% year over year. A breakdown of consumer discretionary imports show household appliances, leisure goods, and home furnishings posted significant increases, up 18.7%, 17.7%% and 22.9% year over year respectively. The trend is further reinforced by these industries showing growth over 2019 as well, up 47.7%, 21.9% and 38.0% respectively.

Industries that faced supply chain hurdles during the year, such as apparel and autos, also posted growth. Imports of textiles and apparel increased by 18.9% year over year, though that was likely held back by renewed outbreaks of COVID-19 in major sourcing locations like Vietnam. Imports of autos also came in higher than the previous year, up 23.6%, despite issues like the chip shortage and ongoing supply chain congestion disrupting the sector. However, the increase may not be enough to meet the elevated consumer and producer demand.

The chip shortage also likely dragged down imports of consumer electronics and information technology products, with the former increasing by only 4.9% year over year and 1.4% from 2019. The latter was the odd industry out, with imports coming in 7.2% higher than 2019 but 0.1% below 2020, making it the only major category tracked to post a year-over-year dip in imports.

Durables stay in demand as pandemic drags on

Chart shows U.S. imports by industry category, with finer granulation in the consumer discretionary space on a year over year basis. Source: Panjiva

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