The rate of imports from China to the US has increased significantly since the previous fall.

• Despite a larger than expected rise in CPI inflation data led by services, recent trade data indicates an increase in U.S. imports from China on the goods side of the economy.
• The nation's major container ports are projected to experience a surge in inbound cargo volume, exceeding two million units monthly for the first time since the fall, due to the closure of the Port of Baltimore and the Port of Virginia in Norfolk experiencing "near pandemic level" volume. This increase in volume is putting pressure on supply chain prices.

New trade and logistics data indicate that imports coming to the U.S. from China are experiencing a notable increase, despite inflation also rising again.

The increase in Chinese import containers to the U.S. began after the reopening of manufacturing plants during the Lunar New Year holiday. According to a report by the National Retail Federation and Hackett Associates, the inbound cargo volume at major U.S. container ports is predicted to reach two million units by May for the first time since the fall, despite new supply chain difficulties.

In 2024, it is predicted that the first half will see a 11% increase in TEUs (twenty-foot equivalent units) from the same period in the previous year, reaching a total of 11.7 million TEUs. In 2023, there was a nearly 13% decrease in imports compared to 2022, resulting in a total of 22.3 million TEUs.

The freight transit orders placed by U.S. retailers and manufacturers are a predictor of a robust consumer-driven economy, indicating future trade data.

Despite supply chain disruptions affecting U.S. ports, including limits on the use of the Panama Canal, Red Sea attack trade diversions, and the shutdown of the Port of Baltimore, U.S. imports continue to increase, according to John Gold, NRF vice president for supply chain and customs policy.

The collapse of the Francis Scott Key Bridge highlights the importance of flexibility and resiliency in supply chains. We are closely monitoring the situation and working with retailers to adjust shipping plans and ensure cargo reaches its destination.

The Port of Baltimore is a significant trade hub, particularly for automobile, truck, and farm equipment, but it is not the largest container port on the East Coast, with a processing capacity of 1.1 million TEUs in 2023. In comparison, New York/New Jersey processed 7.81 million TEUs, Georgia 5.4 million TEUs, Virginia 3.3 million TEUs, Charleston 2.5 million TEUs, Jacksonville 1.3 million TEUs, and Miami 1.25 million TEUs.

The increase in consumer imports and port diversions is affecting supply chain prices, as seen at the Port of Virginia (Norfolk), where container volume is increasing and it is handling Baltimore containers.

On Wednesday, Drayage.com released data indicating a rise in drayage prices in Norfolk due to increased demand for this type of container-moving truck.

"Drayage.com and LoadMatch president Jason Hilsenbeck stated that Norfolk is experiencing pandemic-like levels due to the sudden surge in container cargo. As a result, Norfolk draymen are charging higher rates for their services."

Paul Brashier, vice president of drayage and intermodal for ITS Logistics, reveals to CNBC that from April to May, new ports, specifically NY/NJ & Norfolk, will serve as the North American entry point for Baltimore freight. He explains that there has been a surge in demand for services in Norfolk and New York/New Jersey as more shippers seek assistance in moving their containers due to the Baltimore accident.

The unplanned increase in demand will increase congestion and challenge operations at these locations, leading to an upward trend in dray trucking rates. In the long run, this could result in the migration of transpacific freight from the U.S. East Coast to West Coast North American ports.

The US Port/ Railroad Freight Index of ITS Logistics is raising its warning for both drayage operations on the West Coast and rail ramps to "elevated" due to the increase in eastbound freight coming into the Ports of Los Angeles and Long Beach. The imbalance between the increase in containers and the amount of rail chassis available to move them is causing a lag in the movement of containers.

The ports of Los Angeles and Long Beach are seeing a 25% increase in freight from ITS clients.

Each year, March and April have consistently shown growth of between 5-10% in national import volumes, he stated.

The surge in eastbound containers arriving at the ports of Los Angeles and Long Beach is due to both the drought restrictions at the Panama Canal and the fear of a labor strike at East Coast and Gulf ports. The International Longshoremen's Association's six-year contract with the United States Maritime Alliance, which represents port terminal operators and ocean carriers on the East Coast, will expire on September 30.

"According to Alan Baer, CEO of OL USA, the resilience of the American consumer has allowed 2024 imports to maintain their upward trend. However, the size of the year-over-year increase may be impacted by inflation and higher-for-longer interest rates. The strong U.S. dollar is also helping to support increased purchasing power for importers, mitigating the higher cost of capital."

Despite anticipating reducing interest rates this year, Federal Reserve officials are worried that inflation is not decreasing at a satisfactory pace, as indicated in recent minutes.

The services sector was the main contributor to the latest inflation increase, with auto insurance and shelter prices being the main drivers. However, several goods categories, such as women's apparel and jewelry, rose more than expected. Despite the fact that goods disinflation has helped the Fed in its goal of lowering prices, the ability of goods prices to contribute to disinflation is becoming more limited, according to Sarah House, senior economist at Wells Fargo Economics.

S&P Global Market Intelligence reports that U.S. seaborne imports in March were strong, with containerized freight shipments increasing by 16% year over year. This growth followed two rapid months of increase in January and February, resulting in a total growth of 15% for the first quarter of 2024, according to Chris Rogers, S&P Global's head of supply chain research.

Rogers cautioned that the rate of growth is based on a prior year when firms across various sectors were rapidly reducing inventories.

Over the past five years, shipments have grown by 3.5% annually. According to S&P data, the materials sector experienced the fastest growth rate, with a 20% increase, while paper and forestry products saw a 25% increase. Chemicals and metals also experienced growth, with increases of 15% and 17%, respectively.