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March 11, 2025
Retailers Bringing ‘As Much Merchandise Into the Country Ahead of Rising Tariffs as Possible’ in Frontloading Effort
Retailers are engaging in a substantial frontloading effort to get merchandise stateside before a ramping up of anticipated tariffs, according to the National Retail Federation (NRF).
Citing data from the Global Port Tracker report released on March 10 by the NRF and Hackett Associates, the organization indicated that imports at major American ports are anticipated to remain higher than usual throughout the spring but also that overall traffic could wane as the year winds on.
“Retailers are continuing to bring as much merchandise into the country ahead of rising tariffs as possible,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said.
“The on-again, off-again tariffs against Canada and Mexico won’t have a direct impact on port volumes because most of those goods move by truck or rail. But new tariffs on goods from China that have already doubled from 10% to 20% are a concern, as well as uncertainty over ‘reciprocal’ tariffs that could start in April. Retailers have been working on supply chain diversification, but that doesn’t happen overnight. In the meantime, tariffs are taxes on imports ultimately paid by consumers, not foreign countries, and American families will pay more as long as they are in place,” Gold added.
Trump Administration Considering New Fee on Chinese-Built Ships Docking at US Ports
A further strain on supply chains, and eventually U.S. consumers, could come as a result of a policy being considered by the Trump administration, per Retail Dive.
A fee of between $1 million and $1.5 million imposed each time a Chinese-built ship docks at an American port is currently being proposed by the United States Trade Representative. The proposal is currently open for public comment.
“Given that a significant portion of the global container fleet has been built in China, this means that there will be further costs that will be passed on to cargo owners and ultimately the consumer,” Hackett Associates Founder Ben Hackett said.
“Ports accommodated the surge in import volume in the final quarter of 2024 without major issues, but this will place additional pressure on the supply chain while also harming the nation’s smaller ports,” he added.
If the policy is enacted, carriers are likely to employ larger vessels and consolidate calls at major ports, instead of making more stops at smaller ports.
U.S. ports recorded by the Global Port Tracker dealt with 2.22 million 20-foot equivalent units (TEU) — one 20-foot container or its equivalent — in January, a figure which was up by 4.4% over December and up 13.4% year over year. The Global Port Tracker projected 2.07 million TEU for February, up 6.1% YoY, and if that figure holds, it would represent the most traffic in February in the last three years.
“March is forecast at 2.14 million TEU, up 10.8% year over year; April at 2.13 million TEU, up 5.7%; May at 2.14 million TEU, up 2.8%; June at 2.07 million TEU, down 3.2%, and July at 1.99 million TEU, down 13.9%,” the NRF reported.
Discussion Questions
Will the frontloading effort being put forth by many U.S. retailers stave off price increases for consumers throughout 2025?
If the fee of $1 million to $1.5 million concerning Chinese-built ships making port does go through, what would the immediate impacts be for both retailers and the American consumer? Are there any potential upsides?
What is the likelihood that a frontloading of inventory could result in significant overstock being left in warehouses, backrooms, and on store shelves? What can retailers do to prevent losses in this scenario?
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Melissa Minkow
Director, Retail Strategy, CI&T
Mark Self
President and CEO, Vector Textiles
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Chief Amazement Officer, Shepard Presentations, LLC
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Retailers are very concerned about tariffs and are taking action to protect themselves against the impacts. Frontloading forms part of that strategy, although there are limits based on the constraints of capital/finance, seasonality requirements, and the amount of storage space available. Fortunately, the start of the year is a relatively light inventory period compared to the back end of the year when the holidays raise demand, so there is more slack in warehousing and port capacity. Of course, it’s not just the fact that tariffs will increase costs, it’s also because no one has a clue as to how tariffs will be applied because the policy seems to change by the hour! This a very unsatisfactory way to run things.
Both retailers and customers are concerned about the price increases. Whatever the costs, they will most likely be passed on to the consumer. The “rules” keep changing as to dates, amounts, etc., so it’s almost a game of chance to determine whether to frontload inventory or not. Retailers don’t want to get caught with excess inventory, but they don’t want to be short, either.
I had an in-depth interview about the tariffs enforced during President Trump’s first term. He was known for great service and competitive pricing. However, the tariffs forced him to raise prices to keep the same margins. His answer was to provide a transparent explanation to his customers. He held nothing back, explaining exactly why prices were raised. The customers accepted the explanation and no sales were lost. While that worked for him, it may not work for everyone. But transparency was his tactic of choice.
Frontloading, I must point out, isn’t costless: you have to pay for and store merchandise that won’t be sold for months. And then what? Barring divine intervention we’re in for almost four more years of “Fool-me-once-shame-on-you, fool-me-319-times-shame-on-me” indecision and policy reversals. Short answer: no, it’s no “solution”.
The cost of storing overstock can increase, tying up capital that could be used to make other investments.
As an additional effect of excess inventory, markdowns are often necessary to clear out unsold goods, resulting in a decline in profit margins.
As perishable or seasonal items may become obsolete, causing potential losses, retailers should implement robust demand forecasting models and maintain flexible supply chain strategies that allow for real-time adjustments.
To reduce their reliance on Chinese-built ships, retailers could diversify their supply chain by sourcing products from other countries. Additionally, they could negotiate better prices with shipping companies or explore alternative transportation methods to offset the increased costs. A collaboration with local manufacturers could also reduce shipping expenses and promote domestic production.
I obviously understand why retailers are doing this, but this is exactly the strategy that left retailers with excess unwanted inventory that they had to deeply discount after peak COVID. This is a recipe for disaster if they’re buying into products they wouldn’t have planned on selling super long-term/that consumers may have no interest in. This also drives up storage costs.
This is a nightmare scenario for everybody concerned. Customers, factories, brands, retailers, shippers. And the way it’s all being rolled out doesn’t exactly make Washington DC look razor sharp these days. I’m still trying to figure out who wins in the whole mess…??? Okay, so various products are going to cost more. How much more and when? Uhhhh…don’t know. The subject I don’t hear anybody talking about is demand. What is all this nonsense going to do to demand on down the line? How does any brand or retailer forecast into that uncertainty…??? So they frontload a little. So what? Sounds like a lot of effort to apply a band-aid to a scraped knee, but oh by the way, your leg is broken in 3 places.
If I was a brand or retailer right now, I’d be taking my foot off the gas a little. Not slamming on the brakes, but maybe downshifting. Sure, frontload what you can, but I wouldn’t be doing backflips to do it. I’d be doing everything in my power to work with factories on shorter Time/Action calendars so I could buy later in season. Try to remove some of the uncertainty. It may be smarter to fly a more informed purchase that guessing into uncertainty.
If enough tariffs are put into place on enough products, we will have both a demand problem and a lot of $$$ siphoned into tariffed products that can’t be spent on non tariffed products. So I am back to…who exactly wins in this whole mess…???
And by the way, the million $$$ charges on the Chinese ships is just plain craaaaaaaaazzzzyyyyy. That could make the tariffs look like loose change.
Just a couple of egos win. The people all lose
Sure, retailers are suffering from whiplash, but one thing is a good bet, tariffs will stick, to some extraordinary degree.
So the only option is to buy now and worry about tomorrow. As a sure backup, raise retail prices now to cover the anticipated tariff increase. They have the excuse to explain to the customer.
45% of all cargo ships are built in China. Add in Japan and South Korea and you are up to 93%. The U.S. share is 0.15%. That is not a typo.
So the administration wants to rebuild American shipbuilding? What do they do? Put tariffs on steel! Is there any logic to this?
In order for this to be an effective tactic one needs to have low holding costs and no other opportunities to deploy capital in a way that brings higher value than holding inventory. Not to mention the forward purchasing risk of not getting the inventory that you buy correct.
Personally I do not see the risk / reward here being worth it. And with the daily machinations of this administration going hot and cold (on again! No wait!) I thnk ultimately this will not pay off.
And that’s why TJX always wins
Right…?!?!?!? Arrrggghhh…
Staving off price increases due to tariffs by front loading ordering probably has a very short upside window, and it may not be worth all the meetings, planning, and coordination to make it happen.
But for retailers and grocers who utilize AI, even in small or rudimentary forms, there is upside in front loading to be had in inventory management, purchasing, and merchandising. The key is restraining purchasing by focusing mostly on the sure turning merchandise where there’s much less downside in being left with overstocks and storage space issues.