Today's theme focuses on American household goods import data and the latest global supply chain trends! Not only data, but also help you understand the logic behind the data.

1. After soaring in 2020 and 2021, the import of household goods in the United States returned to normal in 2022, but remained sluggish in 2023. Due to inflation, economic instability, and a sluggish real estate market, demand has been affected. According to the latest shipping monitoring, container imports, including electrical appliances, kitchens, furniture, and other home related goods, increased by 24.8% and 14.5% respectively in 2022 and 2021, but decreased by 5.5% in 2022. During the COVID-19, due to the surge in demand for new housing in the United States at that time and the availability of cash for consumption, container imports of household goods grew strongly for two consecutive years, and then the sales and seasonal return in 2022 were inevitable. In the first quarter of 2023, the total import of household goods in the United States decreased by 34.4% year-on-year, only 0.6% higher than the same period in 2019.


2. According to official data from the United States, the actual non seasonally adjusted number of private housing starts (i.e. the number of new houses starting construction) decreased by 42.4% between April and December 2022. Subsequently, it increased by 25% before March 2023, but still decreased by 17% compared to the same period last year. This is very close to the seasonally adjusted decline rate of 17.2% in March 2022. Prior to this, the unadjusted housing occupancy rate increased by 94% from April 2020 to April 2022. Subsequently, the Federal Reserve of the United States began raising interest rates to combat inflation, thereby affecting home mortgage loans.


3. Since March 2022, the Federal Reserve has raised the federal funds rate nine times, raising it from 0.25% to 5%. This resulted in a mortgage interest rate of 7.1% for the 30-year period in October 2022. In March 2023, this interest rate dropped to 6.7%, but the resulting decline in new house construction, coupled with the rise in prices of various retail goods, caused the import demand for household goods to fall from the frenzy caused by the epidemic. The mutual cash contract quotation of the US federal funds shows that the Federal Reserve may still raise interest rates in June 2023, although the probability is declining, because the US debt negotiations have stalled.


4. According to third-party forecasts, the annualized expenditure on house decoration and maintenance will decrease by 2.8% by the first quarter of 2024. In the next 12 months, household renovation expenses are expected to decrease from $471 billion in the first four quarters to $458 billion.


5. The main vertical importers of household goods in the United States, with the third largest importer, Home Depot, experiencing a 12% decrease in container imports in 2022; Lowe's, the fifth largest importer, saw a 13% decrease in imports in 2022 after a 19% increase in 2021; And Ashley Furniture, ranked 13th overall, saw a 68% year-on-year decrease in imports in 2022! If you are the production supplier and logistics supplier of these recipients, you should have a deep understanding.


6. Meritage Homes, a real estate development and construction company in the United States, stated on April 28th that as homebuyers adapt to higher loan rates, the residential construction industry may be nearing a bottom. In the first quarter, there was a real shortage of new homes across the United States, and the number of second-hand homes registered for resale was extremely limited.


7. From a data perspective, the total import of household goods in the United States in 2022 was still 5.3 million TEUs, an increase of 35% compared to 2019, which also resulted in a backlog of incorrect inventory. Many home appliance retailers say they are still striving to obtain the correct inventory product portfolio.


8. Home Depot, a large home building materials retail company in the United States, reported a year-on-year decrease of 4.5% in comparable sales for the three months ended April 30th. The company expects sales to decline by 2-5% in the 12 months ending January 30, 2024, citing "weak demand relative to our expectations and continued uncertainty in consumer demand patterns." More broadly, the construction goods industry is facing a slowdown in demand and needs to optimize supply chain costs for inventory and procurement. The inventory to sales ratio of Home Depot has reached 68% in the past three months. Compared to 65% in the same period last year, the average for the first five years was 56%. At the same time, the embedding of higher freight costs experienced by COVID-19 has increased inventory costs.


9. Mike Madden, Executive Vice President and Chief Financial Officer of Kirkland's Home, an American home decoration retail company founded in 1966, stated in a financial conference call on April 4, 2023 that in 2023, The sales trend remains challenging. In 2022, Kirkland's Home saw a decrease in both in store and online traffic. The company successfully reduced excess inventory, but this also led to a decrease in inventory in the first quarter. President and CEO Steven Woodward stated, "We will focus on product classification, focusing on starting at $20, and ensuring that our inventory is appropriate to support customer demand.


10. Williams Sonoma, a high-end home retail company in the United States, is renowned for providing high-quality kitchen utensils, cooking utensils, home decor, and home furniture. In 2022, Williams Sonoma's inventory of goods increased by 17% year-on-year, including in transit inventory, with a total inventory increase of 40%! So we are working hard to reduce inventory! We are working to rebalance our inventory composition and regional inventory positions to improve our customer service, "said Jeff Howie, Chief Financial Officer of Williams Sonoma, during a financial conference call in March.


11. Founded in 1924, Hooker Furniture is a company that integrates design, marketing, and import and export of wooden furniture, metal furniture, leather furniture, and fabric upholstered furniture for residential or hotel use. It is phasing out brands with low profit margins and high prices and introducing new domestic products and more casual furniture. Hooker Furniture experienced a temporary delay in shipment in the third quarter of 2022 due to inventory mix issues. These issues were only resolved at the end of 2022, but inventory increased by approximately $35 million compared to the previous year's end, more than double the amount before the pandemic.



12. Household goods companies are also changing their procurement methods to reduce the cost of some imported products and establish a more reliable supply chain. For many recipients, this means transferring more procurement from China to Vietnam, although China remains the main source of household goods imports to a large extent. In 2022, China's share of the US home container import market decreased from 56% in 2021 and 68% in 2018 to 55.1%. Vietnam is the main beneficiary, accounting for 18.5% of all household goods imports last year, compared to 12% in 2018.



13. There are also retailers that are expanding against the trend, and Prime Stores, a low-cost clothing retailer under United Foods in the United Kingdom, is expanding in the United States with plans to open 60 new stores by 2023. This has added 13 existing stores to compete with a range of retailers, including large retailers such as TJX Companies and Target. Primark's transatlantic expansion will provide space for it to further utilize its existing global clothing supply chain, and Primark has already sourced more products from India for the United States, UK, and Europe.



14. According to the latest shipping monitoring, retail sales in the United States increased by 0.4% in April, led by growth in automobiles and healthcare, while non essential consumer goods such as furniture, electronics, and clothing continued to contract. A survey by the University of Michigan in May showed a deterioration in consumer sentiment. Consumer expectations for future conditions have dropped to their lowest level since July 2022. Strong short-term sales and weak expectations have posed challenges to the retail supply chain. In March 2023, the ratio of inventory to sales excluding automobiles increased to 1.21 times, the highest value since November 2019. This includes month on month growth in all industries except food.


15. Finally, pay attention to the chip industry that has been on the hot list recently. In the first quarter of 2023, the revenue of nine major microchip manufacturers worldwide decreased by 21% year-on-year. The corporate reviews of these companies indicate that the industry will recover in late 2023. Currently, it is expected that revenue in the second and third quarters of 2023 will decrease, with a year-on-year growth of 8% in the fourth quarter. The surge in demand for artificial intelligence related services may lead to a long-term increase in demand for graphics processors, as well as a cyclical increase in demand for PCs and smartphones. Comments from chemical and manufacturing equipment suppliers also indicate that microchip production will recover in late 2023. With the launch of new manufacturing plants, there will be an improvement in 2024. According to reports, the Indian government will implement a support plan of 170 billion rupees (2.1 billion US dollars) for the electronic manufacturing industry. The subsidy will include a 5% cash refund of the factory value of the manufacturing industry. The Indian government is seeking to increase investment in the manufacturing of mobile phones and personal computers to meet consumption and exports in the domestic market.