Port Tracker report expects import cargo activity to pick up in March

Following a projected 6.8 percent annual decline in import cargo volume for February, the monthly Port Tracker report by the National Retail Federation (NRF) and Hackett Associates is calling for a 10 percent annual gain for March.

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

According to the report, total 2011 volume hit 14.8 million TEU (Twenty-foot equivalent) for a 0.4 percent increase 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.

“Retailers are still watching all the economic indicators very carefully, but there are enough signs of improvement that stores are carefully stocking up,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers only import more if they expect to sell more, so these numbers are a sign that optimism is growing.”

For January, the most recent month for which data is available, U.S. ports surveyed in the report hit 1.22 million Twenty-foot Equivalent Units (TEU), which was up 4.4 percent from December 2011 and up 1.3 percent from January 2011.

On a recent Webcast hosted by Logistics Management, Hackett explained that even with relatively low growth levels and some economic uncertainty, “the overall economic fundamentals in the U.S. are strong, with steady retail sales growth, strong supply chain management, and a rebound in consumer confidence, couple with industrial production continuing to grow at a rate that has exceeded economists’ expectations.”

Port Tracker is now calling for February, which is usually the slowest month of the year, to hit 1.05 million TEU, which would be down 4.2 percent from February 2011. And March, which is when the report expects things to pick up again, is projected to hit 1.2 million TEU for a 10 percent annual gain. April is expected to be up 3.6 percent at 1.26 million TEU, and May is expected to be flat at 1.28 million TEU.

Looking at the first half of 2012, the report is calling for the first half of 2012 to account for 7.32 million TEU, which would represent a 2.4 percent annual gain. And the NRF noted in the report it expects 2012 retail sales to hit $2.53 trillion for a 3.4 percent gain.

Even with this projected increase, Hackett explained that there remains a significant overcapacity surplus situation for ocean vessels, with most carriers attempting to implement rate increases, which to date have not been sticking with success. But should these rate increases eventually stick he said it could impact retailers and other shippers from a rate and planning perspective.

“The maritime industry is in a quandary,” Hackett said in the report. “As long as this imbalance exists, there will be volatility in the freight rates.”

And in an interview with LM, Hackett explained that during the depths of the global recession going back to early 2009 about 1.4 million-to-1.5 million TEU of capacity was withdrawn, due to cancellations and missed voyages, with slow steaming—a practice used by ocean carriers in recent years to reduce fuel costs—is also factoring into that and still occurring at the moment.

What’s more, said Hackett, is current withdrawals account for roughly 1.1 million TEU, which is down 400,000-to-500,000 TEU from the peak of the recession in early 2009.

“Initial rate increases by carriers look like they are sticking, but if they add too much capacity the pressure will come on again,” said Hackett.