Port Tracker report presents positive perspective for expected volume gains in coming months

Spurred on by expected volume gains due to what is expected to be a hectic back-to-school season, United States-based retail container ports are expected to see decent volume gains in the coming months.

That is the working thesis of the most recent edition of the Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates.

A driver for the anticipated volume uptick is directly related to a new five-year contract between the Pacific Maritime Association and the International Longshore Warehouse Union (ILWU), which was ratified in May, following its expiration in July 2014. 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.

“Now that West Coast ports have recovered from the congestion caused by the recently settled contract dispute, retailers are focused on the back-to-school season to ensure that parents can find the supplies and clothing their children need for the fall,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers are continuing to work with their business partners to address ongoing congestion issues impacting their supply chains. Part of the solution will be Congress passing a long-term highway bill that addresses freight movement.”

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 May, the most recent month for which data is available, came in at 1.61 million TEU (Twenty-Foot Equivalent Units), which the report said was up 6.2 percent compared to April and up 8.2 percent compared to May 2014

Port Tracker estimates June at 1.56 million TEU for a 5.5 percent annual gain, with July at 1.6 million TEU pegged for a 7.3 percent annual increase. August, September, and October are expected to hit 1.6 million TEU (for a 5.5 percent annual increase), 1.63 million TEU (for a 2.4 percent annual increase), and 1.61 million TEU (for a 3.5 percent annual increase), respectively. The first half of 2015 is now expected to see a 6.4 percent annual increase at 8.8 million TEU, matching the projected estimate from last month’s edition of the report.

Hackett Associates Founder Ben Hackett observed in the report that the projected volume gains in the coming months match up well with a series of economic indicators that are heading up.

“U.S. consumer spending recorded its largest increase in nearly six years in May, suggesting that the level of confidence about the future has improved,” Hackett said. “This is very positive news.”

Hackett added that growth in consumer demand is expected to show a very positive impact when second quarter GDP numbers are released, with national growth expected. What’s more, he said that based on the report’s current forecast, a 5.7 percent increase is forecasted for all the ports monitored in the Port Tracker report, which is 1.3 percent ahead of the previous month’s report.

On a geographic basis, he explained that East Coast growth is strong and likely due to shifting of some cargo via the Suez Canal and improved trade with Europe. And on the West Coast he said that the ports of Los Angeles and Oakland were both strong volume-wise in May, as Vancouver and Prince Rupert “continued to erode Seattle and Tacoma.”