U.S. Economy
On Tuesday, February 18, President Trump told reporters that he could impose 25% tariffs on automobiles, pharmaceuticals, and semiconductors as early as April 2. However, he did not specify whether the tariffs would apply to all imported vehicles or target specific countries. One in two U.S. cars are imported (about 8 million annually), and if implemented, the tariffs would have a significant impact on major U.S. auto exporters, including Mexico, South Korea, Japan, and Canada. Meanwhile, U.S. consumers closed their wallets and cut back significantly on consumer spending in January, adding to the growing evidence of a recession. Meanwhile, the Commerce Department reported that U.S. retail sales fell 0.9% month-over-month to $723.9 billion in January. The decline sharply exceeded the Dow Jones composite analysts' expectations for a 0.2% decline, which Bloomberg reported was due to one-time factors such as the cold snap in the northern U.S. and the Los Angeles wildfires, as well as one-time factors such as inflation, higher interest rates, and Trump's tariffs.
In the January Federal Open Market Committee (FOMC) minutes released on Wednesday, February 19, Federal Reserve (Fed) members “judged it appropriate to leave the target rate unchanged,” noting that inflation is likely to rise this year. In the minutes, Fed members agreed that slower inflation would need to be evident before they could lower rates further and expressed concern over President Trump's plans to impose tariffs. Meanwhile, the Consumer Price Index (CPI) rose by a higher-than-expected 3.0% year-over-year in January, the highest since June last year, according to the U.S. Department of Labor on Wednesday, suggesting that interest rates will remain high for the foreseeable future as inflation continues to be high.
Maritime Cargo Market Trends
North America Vessel, Rail Dwell time (Week 8 / Flexport)
Significant increase in US West Coast port volumes in January due to stockpiling
Container volumes at the ports of Los Angeles and Long Beach, two major import and export gateways on the U.S. West Coast, rose 9.5% and 45% year-on-year last month as importers rushed to “stock up” on goods ahead of President Trump's tariffs, Bloomberg reported. In January, 483,831 twenty-foot equivalent units (TEUs) of imported containers arrived at the Port of Los Angeles, with empty container volumes rising 14% year-over-year to 327,143 TEUs. At the neighboring Port of Long Beach, import volumes jumped a whopping 45% year-over-year to 471,649 TEUs. Overall container throughput at the Port of Long Beach, which includes empty containers and transshipment cargo, was 952,733 TEUs, the highest January volume in the Port's history and the second-highest on record when other months are included. The Port of Long Beach attributed the increase to importers bringing in cargo before the Trump administration imposed tariffs on imports from China, Mexico, and Canada.
Air Cargo Market Trends
Amazon surpasses Walmart to become the No. 1 retailer in sales
Amazon, the world's largest e-commerce company, has overtaken 'retail giant' Walmart to become the No. 1 in quarterly sales for the first time ever for a U.S. company. Amazon posted sales of $187.0 billion in the fourth quarter of last year, surpassing Walmart's quarterly sales of $185.5 billion for the first time. Amazon's market capitalization is now about $2.36 trillion, triple Walmart's $784.7 billion. While limited to quarterly sales, Amazon's ascension to the top is significant because it marks the first time an upstart e-commerce company has beaten a traditional brick-and-mortar retailer.