Ocean shipping: Port Tracker report says retail container volumes slowly rising, won't match 2007 levels

Jeff Berman, Group News Editor -- Logistics Management, 7/15/2008

WASHINGTON—Although traffic at U.S.-based retail container ports is slowly growing, total volume is expected to fall short compared to last year’s levels through most of this year, according to the monthly Port Tracker report by the National Retail Federation, a retail trade association, and Global Insight, a provider of economic and financial information.

The ports surveyed in the report—including Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston, and Savannah, and Houston—handled 1.31 million TEU (Twenty-foot equivalent units) in May, the most recent month for which numbers are available. This monthly performance is 3.4 percent better than April’s 1.26 million TEU, but it is off 5 percent from May 2007.

As was reported last month, year-over-year container traffic growth is climbing slowly despite the ongoing economic slowdown—which is driven in large part to sluggish consumer spending and high oil prices. And this edition of Port Tracker reported that the peak month of October—when the largest share of merchandise sold during the holiday season moves through the ports—should improve over last year’s performance, with a projected 1.47 million TEU, representing a 1.7 percent annual increase, along with what would be the first year-to-year rise since July 2007.

Global Insight Economist and Port Tracker Author Paul Bingham told LM that October’s potential performance is contingent on a few different factors, with the chief one assuming that there is no disruption to West Coast port activity from the ILWU contract negotiations over the summer or into October, as well as no significant further disruptions to U.S. trade such as severe weather occurring during that time period.  

“The reason for the increase in [this] October versus October last year is just that shippers are reverting to bringing in holiday goods a little later in the year than last year, when September was the peak month, because they are more confident there will be no capacity problems in October,” said Bingham. “This pattern of imports will also permit them to be able to marginally reduce inventory costs by bringing in more goods closer to expected pre-holiday sales dates.  This monthly performance does not reverse the overall year-over-year decline in imports in 2008 compared with 2007 as a whole.”

Even though October is projected to improve over last year, Bingham cautioned that this will not serve as a springboard for future growth. October, he said, is really a concentration of pre-holiday peak season traffic into October more than any sustained import recovery at this point.

In the coming months, the Port Tracker report expects June’s volume at 1.34 million TEU, down 7.8 percent from June 2007. Other projections include: July at 1.4 million TEU, down 3.1 percent from July 2007; August at 1.45 million TEU, down 0.8 percent from August 2007; September at 1.42 million TEU, down 3.6 percent from September 2007; October at 1.47 million TEU, up 1.7 percent from October 2007; and November at 1.35 million TEU, down 2.0 percent from November 2007.

As the economy continues to struggle and—as the report indicates—and port traffic is slowly growing, Bingham said little is different for shippers in terms of the long-term outlook compared to last month, noting that shippers can expect adequate performance from the entire transportation system in handling their imports without congestion this year.

“The monthly volume increase that follows the seasonality of annual import volumes is muted this year and consequently there will be very little pressure put on the transportation system to handle the weak volumes with existing capacity,” said Bingham. “The only cases where shippers may notice anything with respect to system performance issues could be at container and intermodal terminals that are also used for substantial volumes of loaded export container traffic where space could become scarce due to continued strong growth in export volumes.  So far, however, the exporter problems with container equipment availability and ship capacity have not affected importers at all.”