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Retailers Stock-Up to Beat Tariff Increases

To beat the now-postponed tariff increases on goods from China, retailers have rushed to bring merchandise into the country. According to the Global Port Tracker, a report produced from the National Retail Federation and Hackett Associates, imports at the nation's major container ports reached a record high of 2.04 million containers in October. This is a 9% increase from September and a 13.6% year-over-year increase.

According to the NRF, "We hope that the temporary stand-down becomes permanent, but in the meantime, there has been a rush to bring merchandise in before existing tariffs go up or new ones can be imposed."

November container import projections are estimated to be 2.01 million, a 14% year-over-year increase, and December container import projections are 1.83 million, a 6.1% year-over-year increase. With the combined totals, the total container imports for 2018 are estimated at 21.8 million, a year-over-year increase of 6.5% from last year's record of 20.5 million containers.

While retail sales have continued to grow, with the current change in retail sales of 4.35% beating the 4.33% long-term average, the additional inventory may not come without additional risks. In the hyper-rapid inventory turnover model that Amazon and Walmart continually enhance and improve, for those retailers tied to the import increases that have not adjusted their own models or prepared for potential turns in sales velocity, the additional inventory could cause inventory turnover to slow considerably.

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