2010 retail container volumes expected to be up nearly 15 percent, says Port Tracker

Import cargo volumes at U.S.-based retail container ports are expected to see gains on an annual basis in December and for all of 2010, according to the most recent Port Tracker report by the National Retail Federation (NRF) and Hackett Associates.

In October, the most recent month for which data is available, U.S. ports handled 1.34 million Twenty-foot Equivalent Units (TEU), which matched September. October marks the 11th straight month to show an annual gain after a 28-month stretch of declines that ended in December 2009.

The ports surveyed in the report include: Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston, and Savannah.

As LM has reported, what is happening with these volumes is different from a typical year in which October is typically the peak month for import cargo volumes as shippers move cargo into the U.S. via ocean carriers in advance of the holiday rush. But what is happening now, according to the report, is that the peak month for volumes is being bumped up to earlier in the year.

The shift in the peak month from October to August is due to a backlog in cargo from earlier in 2010 when ocean carriers took their time to replace vessels taken out of service during the recession, coupled with retailers bringing merchandise into the U.S. ahead of time to avoid the potential of delays in the fall.

This year began with sequential gains in December and January, followed by a decline in February. March volumes—came in at 1.07 million TEU (Twenty-foot Equivalent Units), which was up 7 percent from February’s 1.01 million TEU and 12 percent year-over-year. April volumes at 1.15 million TEU—were up 7 percent from March and 16 percent year-over-year. And May hit 1.25 million TEU followed by June’s 1.32 million TEU, July’s 1.38 million TEU, August’s 1.42 million TEU, and September and October’s 1.34 million TEU, respectively.

“Retail sales remain fairly good, and volumes are holding up as the volume drop-off is not as steep as one would expect for this time of year,” said Ben Hackett, founder of Hackett Associates, in an interview. “Our forecast appears to be in line with what is currently happening, with typical seasonality suggesting a lower set of numbers.”

Even with the report’s encouraging data, there are still myriad factors that have the potential to negatively impact retail container import volumes, the most notable being high unemployment.

And with a seasonal downturn expected over January through March in particular, which typically results in lower volumes, Hackett said a surge in volumes near the end of January is likely due to the Chinese New Year, along with another surge during the second half of March, when production ramps up again in China.

“Assuming retail sales stay healthy, we should see a return to growth along the normal seasonal patterns,” said Hackett.

Hackett also said that as volumes increase in 2011, retailers may see higher costs from “slow steaming,” (a method used by ocean carriers to preserve fuel), which can increase transit times and have what he described as a direct impact on the time cost of goods. Slow steaming practices, which many carriers have instituted in the last year, have increased supply chain costs for shippers through higher inventory and transportation costs, according to Hackett.

Carriers are not reducing capacity anymore even with lower volumes, And Hackett said that the implication of this from a shipper point of view is better freight rates.

The report said that the first half of 2010 came in at 6.9 million TEU for a 17 percent year-over-year gain, with the full year expected to hit 14.6 million TEU for a 15 percent improvement from 2009’s 12.7 million TEU, the slowest year since 2003’s 12.5 million TEU. 2008 hit 15.2 million TEU, and the peak in 2007 was 16.5 million TEU.

Looking ahead, Port Tracker is calling for November to come in at 1.25 million TEU for a 15 percent annual gain. December is projected to reach 1.18 million TEU for a 9 percent annual increase, and January is pegged at 1.16 million TEU for an 8 percent gain over 2009. January is expected to hit 1.08 million TEU for a 7 percent increase, and February, which is typically the slowest month of the year, is slated to hit 1.1 million TEU for what would be a 10 percent decrease. March is calling for 1.14 million TEU, which would be a 6 percent increase, and April is slated for 1.18 million TEU for a 4 percent annual gain.

“The nation’s improving economy has been reflected in the amount of merchandise imported by retailers this year,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “We haven’t fully recovered from the recession, and we still need more job creation to get consumer confidence back where it should be. But import levels have seen solid increases throughout the year and we expect that to continue in 2011. Cargo volume doesn’t translate directly to sales, but these trends are certainly in line with what we’ve experienced with monthly retail sales and this year’s holiday season.”