Port Tracker report calls for increased import activity

Following the prediction of its previous edition, which called for earlier than usual import activity at United States-based retail container ports, the Port Tracker report issued today by the National Retail Federation (NRF) and maritime consultancy Hackett Associates said that increased import activity remains intact, as the June 30 deadline for contract talks for West Coast dockworkers between the between the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) has expired.

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.

As negotiations between the PMA and ILWU continues, Port Tracker stated that July volumes could top 1.5 million containers, which would represent the single highest monthly volume in five years and continues a trend in which retailers have been shipping stock to the U.S. well in advance of typical seasonal patterns in an effort to ensure they have enough available stock on hand for the back to school and holiday seasons and also to fend off a possible West Coast port labor strike.

“We’re still hoping to get through this without any significant disruptions but retailers aren’t taking any chances,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers have been bringing merchandise in early for months now and will do what it takes to make sure shelves are stocked for their customers regardless of what happens during the negotiations.”

As previously reported by LM, this labor situation has led to many shippers moving ahead with contingency plans to be prepared for a potential strike, and the report indicated that its data suggests some importers are shifting cargo to East Coast ports, with West Coast ports handling 59 percent of U.S. retail container cargo in May, which is down from 62 percent in January.

According to the report, U.S.-based retail container ports handled 1.48 million TEU (Twenty-Foot Equivalent Units) in May, which is the most recent month for which data is available, for a 3.7 percent gain from April and a 6.6 percent annual gain. June is estimated at 1.46 million TEU for a 7.6 percent annual increase, and the aforementioned month of July is pegged at 1.5 million TEU for a 4.3 percent increase compared to the same month in 2013. August and September are expected to be up 1.6 percent and 1 percent, respectively, at 1.51 million TEU and 1.45 million TEU. October is slotted for a 3.8 percent gain at 1.49 million TEU.

Port Tracker observed that the first half of 2014 is expected to come in at 8.3 million TEU for a 6.7 percent increase.

And Hackett Associates Founder Ben Hackett said in the report that he is predicting 2014 imports to be up 5.1 percent annually, with the East Coast expected to see gains due to the West Coast labor situation, and be up 6.2 percent compared to 2013, while the West Coast is expected to be up 3.9 percent, with the caveat that when a new labor agreement is inked, a recovery is expected for the West Coast.

Hackett commented in the report that even with U.S. GDP declining 2.9 percent in the first quarter, there is reason to believe the economy is improving. He is calling for 3 percent GDP growth in the second quarter, due to things like: a drop in unemployment to 6.1 percent; strong consumer spending over the last three months; and increasing consumer confidence that is at its highest level since 2007, according to the Bloomberg Index.

“We also believe that the inventory-to-sales ratio will continue to decline as a result of higher consumer spending and the impact of potential west coast port disruptions,” wrote Hackett. “None of this, however, is impacting the flow of containers imported through the ports [in Northern Europe]. Our forecasts for May were virtually spot on and we continue to look for further growth going forward. While there may not be a major peak season due to the high levels of inventory, goods will continue to flow.”