Port Tracker calls for import cargo volume declines into the first quarter

The most recent edition of the Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates expects retail import volumes to tail off during the first quarter of 2016, with the holiday shipping season complete.

The ports surveyed in the report include: Los Angeles/Long Beach, Oakland, Tacoma, Seattle, Houston, New York/New Jersey, Hampton Roads, Charleston, and Savannah, Miami, and Fort Lauderdale, Fla.-based Port Everglades. Authors of the report explained that cargo import numbers do not correlate directly with retail sales or employment because they count only the number of cargo containers brought into the country, not the value of the merchandise inside them, adding that the amount of merchandise imported provides a rough barometer of retailers’ expectations.

“This is the time of year when the retail supply chain catches its breath before the next big rush begins,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers are still tallying the bottom line of the holiday season, but they’re also making plans for the spring and summer.”

The report stated that preliminary 2015 volumes, which are still subject to revision, were up 5.4 percent annually at 18.2 million TEU (Twenty-Foot Equivalent Units). Most of that growth is coming from East Coast ports being up 10.5 percent annually.

For November, the most recent month for which data is available, total volume came in at 1.48 million TEU, which was slightly below last month’s estimate of 1.50 million TEU. This marked a 5 percent decline compared to October, and a 6 percent annual gain, with most holiday merchandise having already by that point, the report explained.

December was pegged at 1.44 million TEU, which would be flat annually, and January is estimated at 1.47 million TEU, which would be an 18.9 percent annual increase. The high annual gain is due to January 2015 being just prior to when a new West Coast port labor agreement was reached. As previously reported, the combination of West Coast port labor issues, which led to congestion, hindered port production and throughput from late 2014 into the first quarter of 2015 are expected to result in atypically high annual comparisons before returning to a more normalized rate in April, according to Port Tracker.

February and March are expected to come in at 1.41 million TEU and 1.34 million TEU for a 17.5 percent annual increase and a 22.4 percent annual decrease, respectively. And April is expected to be down 1.8 percent at 1.48 million TEU.

Hackett Associates Founder Ben Hackett wrote in the report that inventory-to-sales ratios remain a concern going forward, adding that enough time has passed since the disruption on the West Coast that it can no longer be looked to for justifying high inventories.

And he added that recent manufacturing data has been sluggish, with the Institute of Supply Management’s reporting contraction in November and December, holiday retail sales numbers expected to come in lower than anticipated, and GDP remaining under 3 percent

In a previous interview, Hackett said there are a few different things to focus on when looking at current import levels.

“Consumer confidence has decreased and is a concern at some level,” he said. “The inventory-to-sales ratio, manufacturing PMI, and savings rate gains in tandem with increased credit card activity are the things to keep an eye on. It is a mixed bag of economic fundamentals, with nothing definitive saying things are going well or going badly.”

With the report expecting more normalized import flows by next April, Hackett said that is contingent on inventory levels coming down, with the assumption that they should.

“The major thing that needs to happen to ensure inventory levels do in fact decrease is if disposable income levels increase,” explained Hackett. “If that happens, things should be OK. The personal savings ratio is outpacing the personal expenditures, which means there is a gap there with consumers saving more money, which is propping up the savings ratio.”