Port Tracker report calling for slow growth in 2013

With the current status of labor negotiations between the International Longshoremen’s Association and the United States Maritime Alliance at East and Gulf Coast ports in flux, import volume growth is expected to show modest growth, according to the most recent edition of the Port Tracker report from the National Retail Federation (NRF) and Hackett Associates.

The Port Tracker report said 1.25 million TEU (Twenty-foot Equivalent Units) were handled in November for the ports followed by Port Tracker, marking a 2.8 percent decline from November 2011 and an 8.6 percent decline from October. This is the most recent month for which data is available.

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 the recent addition of Fort Lauerdale, Fla.-based Port Everglades.

Port Tracker reported that the first half of 2012 accounted for 7.7 million (Twenty-foot Equivalent Units), which is up 2.9 percent annually and ahead of previous estimates in the 7.3 million TEU range. And for all of 2012 the report is expecting 15.9 million TEU for a 2.9 percent annual gain, which is down from a previous estimate of 16.1 million TEU and a 4.5 percent annual gain.

The 2011 total was 14.8 million TEU, which was up 0.4 percent over 14.75 million TEU in 2010. Volume in 2010 was up 16 percent compared to a dismal 2009. The 12.7 million TEU shipped in 2009 was the lowest annual tally since 2003.

The report estimates December volumes hit 1.33 million TEU for a 6.5 percent annual gain, with January forecasted at 1.31 million TEU for a 2.3 percent bump. February is expected to increase by 6 percent at 1.15 million, and March is expected to head up 0.5 percent at 1.25 million TEU.

“The strike deadline came and went at the end of December, but the threat of closing down nearly half our nation’s port capacity has only been postponed, not eliminated,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “The uncertainty of what will happen in February has retailers implementing expensive contingency plans yet again and is a burden our economy cannot afford.”

Contract talks between the ILA and USMX were recently extended from December 29 to February 6 on the heels of previous strike deadlines in September and October

Port Tracker said that the union and management are scheduled to meet next week under the supervision of federal mediators, but the ILA walked away from local talks affecting the Ports of New York and New Jersey earlier this week. As previously reported, a strike would close 14 ports from Maine to Texas where nearly 15,000 dockworkers handle 40 percent of the nation’s ocean cargo.

In preparation of a possible strike, many shippers have had contingency plans in place to re-route freight to ensure supply chain operations and planning are not altered or compromised.

This was verified by Hackett Associates Founder Ben Hackett in the report. Hackett said that there was signs retail shippers brought freight into the U.S. early when the ILA December 29 deadline was looming. He added that there was a rise in the level of the retail inventory-to-sales ratio, which may be a reflection of importers stocking up ahead of the East/Gulf Coast strike that was expected even through the run-up occurred well ahead of that.

In an interview with LM, Hackett said that U.S.-bound import growth is expected in 2013 but at a slower pace than in 2012.

“Uncertainty is the main reason for this,” he said. “First, there was the Fiscal Cliff concern, which has since been resolved somewhat. But tax increases will take disposable income out of the system. The next level of uncertainty is the debt ceiling, which will likely cause consumers to save more money. Things are not the same as they have been over the last 20-to-30 years. Growth is slowing down due to things like globalization coming more into balance and consumers being more hesitant and qualified in terms of what they are buying, which is influencing purchasing patterns. The boom days seem to be over.”

Hackett added that there currently is too much ocean carrier capacity relative to demand, with carriers still not removing as much capacity as is needed to get the market back to an acceptable equilibrium. Instead, carriers remain focused on holding on to market share, he said.

On the pricing side, this is highly likely to lead to a depressed rate environment for ocean carriers again, with a fair amount of volatility, said Hackett.