Ocean imports of containerized toys into the United States continued to decline in the first quarter of 2014, according to PIERS, the data division of JOC Group, with shippers importing the lowest quarterly volume since the second quarter of 2009.

　　A total of 137,974 TEUs of toys were imported into the U.S. in the first quarter, a 7.3 percent decrease from the same period in 2013, and a 37.6 percent drop from the previous quarter. There have been four consecutive months of year-over-year declines.

　　“Even after the Great Recession ended in 2009, U.S. containerized imports of toys continued to trend down, partly owed to persistent weakness in disposable income growth, and more recently, a bit of re-shoring activity,” JOC Economist Mario Moreno said.

　　“Several U.S. toy manufacturers have shifted production back to its home market partly due to rising production costs in top source country China, while gaining greater control of the manufacturing process.”

　　The U.S. Census Bureau’s Foreign Trade Division data for the spring reveal imports of consumer goods are up, but several commodities are struggling. Toys, games and sporting goods showed the second-largest decline from February to March, behind only the footwear industry. In the first quarter of 2014, however, the industry imported $8.99 billion worth of toys, a 2.3 percent or $211 million rise from 2013’s first quarter imports, which totaled $8.78 billion. Those numbers reflect all toy imports to the United States, not just containerized shipping.

　　“We’re definitely importing less,” Rich DeRose, owner of Castle Toy, Inc., said of his North Hollywood company. DeRose said he imports primarily from China. “Toys aren’t what they used to be. Electronics are killing the toy industry.”

　　The first quarter is typically the weakest for the toy industry. Fueled by the upcoming holiday season, quarters two and three usually see the highest volume numbers as shippers pipe in merchandise to fill their holiday shelves. But those quarters have also seen drops in containerized toy imports: second quarter imports in 2013 dropped by 4.5 percent from 2012, and volume in the third quarter of 2013 dropped 7.5 percent from the third quarter of 2012.

　　China remained the dominant source country for containerized U.S. toy imports, with 80.9 percent of the market.Full-size chartHowever, some industry professionals believe containerized toy imports could rise in the second quarter because of labor negotiations on the West Coast.

　　“Our imports were up, and that’s for a variety of reasons,” said Dave Akers of the Toy Shippers Association. “We have added new members, but we are also seeing our members shipping their merchandise into the country as early as they possibly can because of what’s going on on the West Coast.”

　　In March, the Toy Industry Association warnedits members to make contingency plans for their largest volume months in the summer and fall, ahead of negotiations between the West Coast port employers and longshoreman. The contract between the International Longshore and Warehouse Union and the Pacific Maritime Association expires at the end of June.

　　The Toy Industry Association’s members represent 90 percent of the industry. Though the TIA says the potential impact of a strike has been difficult for companies to predict, it anticipates costs will extend throughout the supply chain. The toy association also notes that some shippers are changing their mode of transportation in response to potential maritime shipping slow-downs.

　　“Simply the threat of a strike has already caused shipping to slow due to equipment and space shortages,” a TIA spokesperson said. “Costs are also increasing because manufacturers are having to invest in the development of alternate transport models. We know that many toy companies have already arranged shipments to arrive on the East Coast, though there has already been congestion at those ports reported as a result.”

　　“Other toy companies are making the decision to ship to Mexico and Canada, resulting in lost income for the United States – and in other instances our members are investigating the possibility of having the product airlifted, which is extremely expensive,” the spokesperson said.

　　Of the top source countries for U.S. containerized toy imports, mainland China — not including Hong Kong — remained dominant, holding on to 80.9 percent of the market, up 1.9 percentage points from the 79.0 percent that it held in the same period last year. Hong Kong, the second-largest source country, lost 1.6 percentage points of its share, slipping to 4.0 percent of the market. Taiwan also declined, losing 0.6 percentage points, but retaining third place with 3.1 percent of the market.

　　While the market shares fluctuated, volume coming out of the top source countries declined as well. Mainland China saw a 5 percent drop in its volume, despite its market share increase. Hong Kong and Taiwan saw the largest drops in volume of the top source countries, with Hong Kong down 34 percent and Taiwan down 22 percent from the first quarter of 2013.

　　Two countries, however, saw a jump in overall volume in the first quarter. Volume from Vietnam, the fourth-ranked source country, rose 30 percent, and fifth-place Indonesia saw a 14 percent hike.