Sales of Star Wars toys forecast to force a rise in US containerized toy imports

Key Points:

• US containerized imports of toys are forecast to increase 10.9% in 2015, partly due to strong demand of ‘Star Wars’ merchandize.
• China, Vietnam gained the most ‘sourcing share’ in toy imports trade year-to-date.
• Port of Los Angeles handled the most international inbound shipments of toys in terms of TEU volume
• S. import prices of toys will tend to remain subdued at least for the short term 

Demand for toys awakens                                                                                   

• After falling by three consecutive years, US containerized imports of toys began to rebound in the second half of 2014, partly because of strong demand for Disney’s ‘Frozen’ gear. This year, however, a new star performer emerged: ‘Star Wars’. Demand for ‘Star Wars” toys, which are said to be bulky, taking a lot of space in a 20-foot container, is very strong as the market waits for the release of the new Star Wars movie, ‘The Force Awakens’, this December in cinemas across the world.
• Toy imports are now up for five consecutive quarters, year-over-year, through the third quarter of 2015, and is expected to end the year up 10.9% for a total TEU (twenty-foot equivalent unit) count of 581,053, after growing 3.5% in 2014, according to PIERS data. 

China, Vietnam gain most sourcing share

• By TEU volume, China is the largest supplier of toys to the US, accounting for 83.9% of the market year-to-date through September, up modestly from 83.5% over the same period in 2014. Year-to-date, toy imports from China are up 13%, likely tied to increasing shipments of ‘Star Wars’ paraphernalia.
• China continues to hold a very large piece of the market, partly because of a well-developed supply chain network, despite rising production costs. The recent depreciation of China’s renminbi is an added advantage. Since 2014, the renminbi has depreciated 5.2% against the US dollar.
• Toy shipments from Vietnam are also growing at a remarkable pace, up 28% year-to-date, after growing 17% in 2014. Vietnam’s sourcing share is also increasing albeit from a small base, from 1.6% share in 2013 to 2.2% share year-to-date. 

Port of Los Angeles handled most inbound traffic of toys

• Year-to-date, from January through September, the Port of Los Angeles handled the most international inbound shipments of toys, with a 26% share of the trade in terms of TEU volume, down 3% points from the same period in 2014.
• Long Beach followed with a 23% share of the trade, down only 1 percentage point from the same period in 2014.
• New York and New Jersey and Savannah handled 11% and 10% of the traffic, respectively, up 1% each from the same period in 2014. 

Outlook on toy imports and import prices:

• From the fourth quarter of 2007 to the third quarter of 2015, the correlation between the U.S. import price index for toys and U.S. toys imports via ocean container was measured at a negative 58%, a solid correlation coefficient. Thus, as prices of imported toys increases, demand for toys tends to decline.
• Determinants of toys are several, but most important ones are: import prices, children population growth, downstream demand from toy retailers, and real disposable income.
• Given expectations the U.S. dollar will continue to gain value through the first half of 2016, and the recent depreciation of China’s renminbi, U.S. import prices of toys will tend to remain subdued at least for the short term.

Analysis by Mario Moreno, Senior Economist

JOC Insights, IHS Maritime & Trade