Port Tracker report points to slow return to normal for U.S. retail container import volumes

The most recent edition of the Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates point to closer levels of normalcy at United States-based retail container ports on the heels of a recently inked West Coast port labor agreement between the Pacific Maritime Association and the International Longshore & Warehouse Union (ILWU).

As previously reported, prior to this deal being inked, the nine-month labor disruption between the parties had a major impact of port throughput and operations, the country’s supply chain, and the economy. During this time, there were periods of labor unrest and uncertainty that impacted freight flows and port operations in the form of terminal congestion and related supply chain challenges until PMA and ILWU reached their tentative agreement in February. Emotions on each side ran high, and when prospects of a new deal were at its bleakest point, the sides turned to the U.S. Federal Mediation and Conciliation Service in hopes of helping the sides find a way to come to an agreement.

“Despite some lingering labor issues, the volume of cargo and the rate of growth have both largely settled down,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “There are still congestion issues to be dealt with but we’re hoping to see reasonably normal back-to-school and holiday seasons this year now that the tensions of contract negotiations are behind us.”

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 April, the most recent month for which data is available, came in at 1.52 million TEU (Twenty-Foot Equivalent Units), which the report said was down 12.4 percent compared to March, but the report explained that March volume were spurred by surge of backlogged cargo resulting from the PMA and ILWU reaching a tentative agreement in late February. April saw a 6.1 percent gain over April 2014.

Port Tracker estimates May at 1.56 million TEU for a 5 percent annual gain, with June at 1.52 million TEU for a 2.6 percent annual increase. July, August, and September are expected to hit 1.57 million TEU (for a 4.9 percent annual increase), 1.57 million TEU (for a 3.3 percent annual increase), and 1.6 million TEU (for a 0.6 percent annual increase), respectively. And the first half of 2015 is now expected to see a 5.4 percent annual increase at 8.8 million TEU.

While volumes are expected to slowly improve, Hackett Associates Founder Ben Hackett wrote in the Port Tracker report that it will be somewhat slow to develop as the West Coast recovery is still sluggish, with the East Coast ports not sustaining the growth levels it had in recent months prior to the West Coast port labor contract being inked.

Another factor that needs to be monitored is what Hackett said is a “stubbornly high” inventory-to-sales ratio, which he explained suggests importers are having problems clearing built-up stocks and is also reflected in weak consumer demand, low GDP growth, and an ongoing five-month decline in U.S. industrial production through April, which shows a lack of economic momentum at the outset of the second quarter.

“The West Coast recovery remains sluggish and the East Coast is not managing to hold on to the growth levels it has experienced over the past few months,” Hackett wrote. “June is going to be a mixed month for the West Coast with volatility between the ports, but July and August are projected to see growth across the board. On the East Coast, we are projecting growth for most ports.”