Imports have often been viewed as a key economic indicator for the health of the US economy. Is the US recovering? Imports are up, but recovery may be selective. By George Lauriat, AJOT Ever since the recession began in late 2007, economists like physicists searching for the elusive Higgs boson, have looked for every small sign of an improvement in the global economic order. In the United States - leastwise for the last three decades - one of the barometers of the nation’s economic health and well-being has been robust import figures. In dollar terms 2007 US imports (see chart) amounted to nearly $1.957 trillion and, even with the onset of recession, climbed to $2.1 trillion before the dramatic drop in 2009 to around $1.56 trillion. Although the dollar value reflected the tremendous impact that the recession had on the US economy and US consumers (albeit 10 months later), a better gauge of the economy’s temperature and overall health might be the actual movement of goods, as reflected by teu (twenty-foot-equivalent units, the boxes that carry a vast majority of the consumer items found in every American household. In 2007, the strongest year for imports, measured in box terms almost 19 million units (see Zepol chart). An overwhelming percentage of these boxes came from Asia, amounting to over 13.85 million teus. But by 2008, the recession had caught hold and box totals fell to 17.69 million teus with 12.8 million teus coming from Asia. Re-thinking retail A vast majority of the boxes were destined for mega- retailers, such as Wal-Mart, JC Penney, Kohls, Target, Sears/Kmart or Macy’s. (See Karen Thuermer’s page 4 article, “For retailers, it’s shipping as usual…or is it?) It’s no surprise that the emergence of China as an economic powerhouse and “factory to the world” coincided with the rise of Wal-Mart. In fact, it could be argued that Wal-Mart’s outsourcing for consumer products is the real “China Strategy,” and everything that has happened subsequently is merely a variation on the theme. In 2010 Wal-Mart, according to US Customs numbers, imported almost 216,000 teus of goods. The real number is probably over 700,000 teus. Likewise, Target Stores, by their own admission the second largest US importer behind Wal-Mart, officially tallied only 47,540 teus, approximately one-tenth of the real number, which is close to 500,000 teus. The import numbers (by US Customs figures) in teus are generally much lower than the real totals. Many retailers have moved portions of their supply chain to third parties and thus significantly reducing the number of boxes moving under their own BLs. From the other side, suppliers to the big retail stores also are utilizing services from 3PLs/4PLs to manage their supply chains. Part of the attraction is that the level of sophistication of supply chain management enables customers to shift their supply chains like mobile phone users change sim cards. The flexibility is essential as political and natural disasters are part every day life for manufacturers. For example, the floods in Thailand disabled auto assembly plants in Malaysia, as key components couldn’t be delivered. It’s not only the 3PLs/4PLs handling the supply chains of multinational retailers. Hong Kong’s famous Li & Fung are probably the largest supplier of consumer goods logistics in the world. In 2010, Li & Fung inked a deal with Wal-Mart stores to supply clothes and consumer goods. The company established a unit “WSG” in Hong Kong to handle the business. In recent years, the sourcing giant has made deals with Hudson Bay and Talbots and bought Liz Claiborne. The company has been aggressively pursuing consumer manufacturing and logistics companies worldwide to help supply Wal Mart. In 2011 the company acquired eleven companies (including suppliers to Disney and Sesame Street) to keep pace with mega-retailer’s demand. The company reportedly derives around 60% of its revenue from the US market, and suffered with the weak demand during the recession. Last year the company shipped over 32,000 te