Ocean shipping: Port Tracker report expects annual volumes to fall short of 2007 levels

Jeff Berman, Group News Editor -- Logistics Management, 8/11/2008

WASHINGTON—Keeping in line with what has been a slow year in terms of volume growth at U.S.-based retail container ports, the outlook for the rest of the year will fall short of last year’s output by four percent, due in large part to a sluggish economy, 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 1.3 million TEU (Twenty-foot equivalent units) in June, the most recent month for which numbers are available. The report said that this is a 0.3 percent decline from May and a 10.3 percent drop-off from June 2007.

With the economy not growing as expected, 2008 has been a challenging year with cargo volume reflecting consumer demand as retailers work to keep inventory as tight as possible in order to keep supply and demand in balance, said Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy, in a statement.

This is presenting a situation in which annual volume is projected to come up short—at 15.8 million TEU—compared to 2007’s 16.4 million TEU, the report said. And this has been reflected with cargo volume for each month this year below 2007’s levels on a year-over-year comparison, and it is expected to remain the same for the remainder of the year except for October and November, according to Port Tracker.

And as the months go on and the consumer spending slowdown and the economy remain firmly entrenched, there is growing sentiment that this year’s Peak Season will be quieter than those of the last two years, which were lighter than usual.

“There are signs that this year's peak season will be more muted than last year,” said Paul Bingham, Global Insight economist and Port Tracker author, in an interview. “We are forecasting an absolute decline in same-month year-ago comparisons through peak season for imports, meaning this year is going to have a more mild peak than the last two years.”

In the coming months, the Port Tracker report expects July’s volume at 1.37 million TEU, down 5.2 percent from July 2007. Other projections include: August at 1.42 million TEU, down 2.7 percent from August 2007; September at 1.4 million TEU, down 4.9 percent from September 2007. But October, traditionally the busiest month of the year, is expected to come in at 1.46 million TEU, up 1.1 percent from October 2007. This will not be in line with the 1.48 million TEU handled in September, which was the busiest month of the year. November is slated to hit 1.37 million TEU, which is down 0.3 percent from November 2007. And December is pegged for 1.32 million TEU, which would be a 3.4 percent spike.

For shippers, U.S. port congestion risk is minimal for the remainder of the year and capacity from their inland carriers should be adequate into next year, explained Bingham. 

“As shippers deal with weak sales and efforts to minimize unwanted inventory accumulation, they will be able to count on their carriers to get the imports delivered from the ports without disruption,” he added.  

And assuming ratification from the rank and file of the ILWU of  their labor contract, there are no further pending potential big disruptions for the remainder of the year, said Bingham.

Other things Bingham said to keep an eye one include: the start up of the "clean trucks" programs at the ports of Los Angeles and Long Beach with the first date of October 1 likely to be delayed in implementation by the legal action taken by the American Trucking Associations to fight the regulatory requirements imposed on port trucking as part of the plan. 

But From an operational perspective any injunction will just result in continuation of the status quo, which this year is providing adequate capacity at the ports, noted Bingham.  Weather, though, remains the “wild card, as always, and can be expected to cause some temporary disruptions somewhere at some time…but the good news is that there is adequate capacity to handle the imports throughout the system even in case of temporary weather disruption.”