Port Tracker report calls for 14.5 percent annual volume increase

Like last month, the most recent Port Tracker report by the National Retail Federation and Hackett Associates is calling for import cargo volumes at U.S.-based retail ports to decline throughout the rest of 2010.

This projection is a far cry from a typical year, which usually sees October as the peak month of the year for import cargo volumes as shippers move cargo into the United States via ocean carriers in advance of the holiday rush.

In August, Port Tracker noted that July—rather than October—would be the peak month of 2010. According to the report, U.S. ports handled 1.38 million TEU (Twenty-foot Equivalent Units) in July, which is the most recent month for which data is available. Port Tracker said this is a 5 percent increase from June and a 25 percent gain from a challenging 2009. What’s more, it is the eighth straight month to see an annual improvement after a 28-month streak of declining volumes was snapped in December 2009.

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 and July’s 1.38 million TEU.

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

The report’s authors said that the reason July’s TEU count could end up as the peak month of 2010 are primarily due to backlogs built up due to the lack of shipping capacity earlier in the year after ship owners took vessels out of service during the recession. When vessels were removed from service, it also created significant challenges for shippers trying to secure waterborne capacity and a subsequent container shortage, too.

“Shippers and importers have sort of moved ahead of the market by buying early partly out of fear that there was not going to be enough capacity later on, and it seems that they [got] a head start,” said Ben Hackett, president of Hackett Associates, in a recent interview. “This is what really drove the May-July figures.

Hackett added that he believes the container shortage is close to an end, with carriers putting vessels back into service that are charged with bringing back empty containers from Europe and North America. And the amount of empty containers moving out of U.S. ports is higher through the first six months of 2010 than it was for all of 2009, according to Port Tracker.
And with various economic indicators taking steps backwards in recent weeks, Hackett pointed out that consumer confidence appears to be moving in lockstep with that trend, as current levels—since June—are in line with August 2009.

“Retailers have stocked up early on much of their holiday merchandise in order to avoid some of the supply chain disruptions seen earlier in the year,” said NRF Vice President for Supply Chain and Customs Policy Jonathan Gold in a statement. “Cargo is still coming in, but the key question for sales will be what happens with employment and other factors that affect consumer confidence this fall. Retailers are hoping they’ve hit the right balance of supply and demand.”

Even though the Port Tracker report maintains that July may turn out to be the peak shipping month of the year, Hackett said growth in the following months is likely.

According to Port Tracker, the first half of the year was estimated at 6.9 million TEU, which is a 17 percent gain compared to the same period a year ago. And the full year Port Tracker forecast is calling for 14.5 million TEU for a 15 percent gain from 2009’s 12.7 million TEU—the lowest annual tally since 2003’s 12.5 million TEU, noted Port Tracker. The report also cited that 2010 projections fall below 2008’s 15.3 million TEU and 2007’s 16.5 million TEU, the all-time Port Tracker annual TEU record.

Looking ahead, Port Tracker is calling for: August projected to hit 1.35 million TEU (a 17 percent increase); September to hit 1.32 million TEU (a 16 percent increase); October to hit 1.3 million TEU (a 9 percent increase); November to hit 1.2 million TEU (an 11 percent increase); and December to finish the year at 1.11 million TEU (a 2 percent increase). Heading into 2011, the report expects January to come in at 1.06 million TEU for a 2 percent dip.