Inventories swelled in the second quarter as West Coast ports cleared backlogs of imports and exports that had pile dup during a labor dispute. Economists say the inventory expansion helped fuel strong growth in the spring. But a pullback by retailers and manufacturers may slow output through the rest of 2015.
The latest Global Port Tracker report by the National Retail Federation and Hackett Associates LLC projects only modest growth in container imports at U.S. gateways this fall. Freight rates for shipping from Asia, where the largest share of imported goods originate, have been at multi-year lows this year, reflecting the muted expectations and an oversupply of shipping capacity.
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“While the flow of product from the port has now returned to normal, we’re working to efficiently clear excess inventory to keep our in-line channel healthy,” said Trevor Edwards, president of Nike Brand.
“We will continue to feel the effects of our elevated inventory levels the remainder of this year,” Chief Executive Alex Smith said on an earnings call. “This is particularly frustrating and we are disappointed about the impact it’s having on our margins and profitability.”