Port Tracker report cites improving throughout at West Coast ports

With the months-long West Coast port labor dispute settled to a degree, it appears that the table is set for healthy annual gains at U.S-based retail container ports in April, according to the most recent edition of the Port Tracker report from the National Retail Federation (NRF) and Hackett Associates.

As West Coast ports continue to recover from a cargo backlog spurred on by nine months of negotiations and tension between the International Longshore & Warehouse Union and the Pacific Maritime Association prior to a tentative agreement that the roughly 20,000 port workers at 29 West Coast ports will vote on in May, the Port Tracker report expects volumes in April to be up 9 percent annually.

“Progress is being made but there’s still a lot of cargo waiting to be loaded onto trucks and trains and moved across the country even after it’s unloaded from the ships,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “The situation is getting better but we’re still far from normal.”

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.

The Port Tracker report said that February, the most recent month for which data is available and typically the lowest-volume month of the year, reached 1.2 million TEU (Twenty-Foot Equivalent Units), which was down 10.3 percent from January and down 3.6 percent compared to February 2014.

The report estimated March volumes to be up 13.5 percent at 1.48 million TEU, and April is pegged for an 8 percent annual bump at 1.55 million TEU. June and July are expected to be up 4.3 percent and 5.6 percent, respectively, at 1.54 million TEU and 1.58 million TEU.

As previously reported, the increase in March is attributed to the arrival of spring merchandise, as well as the backlog of ships at anchor still waiting to be unloaded (which is lessening) and the later date of the Lunar New Year, which the report said was expected to push some February cargo into March.

“The disruption of the west coast appears to be over and great measures are being taken to clear up the backlog of ships sitting offshore at Los Angeles and Long Beach,” wrote Hackett Associates Founder Ben Hackett in the report.

But with cargo backlogs somewhat easing, especially when compared to higher levels earlier this year, Hackett warned that the aftereffect of ships being discharged from West Coast ports is creating landside issues, with workers endeavoring to move containers out of port terminal gates and onto trucks and railcars, which he described as a struggle.

This subsequently resulted in carriers and shippers switching shipments for east coast discharge, with excess cargo mounting with bottleneck in customs, hauling and delivery.

As parties work to clear the backlog, Hackett explained that railroads are having a hard time finding enough capacity for the long haul of import cargo to the Midwest, which, in turn presents conflicting future scenarios and has importers and exporters reviewing their future supply chain plans, which may not favor moving cargo in and out of the West Coast.

The reason for that, he said, is that they may want to avoid future West Coast port disruptions, when the next labor contract expires in five years, but he also noted that East Coast ports could be dealing with a similar situation when their contract expires in 2017.

“But costs differentials will be what brings them back to the West Coast,” he said in an interview. “It costs twice as much to ship to the East Coast, with cargo still needing to be hauled to the Midwest. And shippers and distributors have made major investments out west into distribution centers, which means there is still a lot going for the West Coast.”

When the parties initially reached a deal in late February, industry estimates suggested it would take about two months to clear out the cargo backlog. Hackett said that he expects that ships will discharge very rapidly, resulting in backlog getting cargo out of the ports.

To augment things, though, he said large alliance carriers will make better use of terminals in an effort to be more efficient, adding that even with the labor disruption there were some West Coast port terminals that were relatively empty.