Port Tracker report signals a slow return to more normalized import freight flows

Leveraging a theme of improvement, following a tentative West Coast port labor dispute agreement between the Pacific Maritime Association and the International Longshore & Warehouse Union (ILWU) reached in late February, the most recent edition of the Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates painted a positive picture, with import cargo levels at U.S.-based retail container ports slowly getting back to normal levels.

This comes ahead of a May 22 ratification vote of a new West Coast port labor agreement between the concerns.

As previously reported by LM, West Coast ports continue to recover from a cargo backlog caused by the labor dispute, with the report explaining that the lack of a contract, coupled with operational issues brought on what it described as “crisis-level congestion” at the 29 impacted West Coast ports with roughly 20,000 workers.

“Dockworkers and management made a massive push to clear the backlog of cargo over the past several weeks and West Coast ports are getting back to normal despite concerns such as the Teamster picketing seen in Los Angeles and Long Beach earlier this month,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “We hope to see this month’s ratification vote go smoothly and then settle into a long period of efficient, dependable operations before we have to think about contract talks again. But there are still plenty of other issues impacting congestion that the ports need to work through.”

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 March, the most recent month for which data is available, reached a record-high1.73 million TEU (Twenty-Foot Equivalent Units), which the report said was spurred by a flow of backlogged cargo following the tentative agreement reached between PMA and ILWU. This marked a 44.9 percent uptick over February, and 33.1 percent annual gain.

Port Tracker pegged April at 1.55 million TEU for an 8.1 percent annual gain, with May at 1.56 million TEU for a 5.4 percent jump. June, July, and August are expected to hit 1.53 million TEU (for a 3.7 percent annual increase), 1.57 million TEU (for a 5.1 percent annual increase), and 1.58 million TEU (for a 3.9 percent annual increase), respectively. Port Tracker estimated that the first half of 2015 will reach 8.8 million TEU for a 6 percent annual gain over the same period in 2014.

Hackett Associates Founder Ben Hackett said in the report that the volume gains being reported are coming at a time when vessel owners are rolling out myriad large new vessels that could subsequently lead to “a price war on shipping rates.”

This could have the effect of altering the “supply/demand balance,” he said, “with not enough demand to justify this low level of capacity increase. Expect rates on both coastal services to fall to all-time lows.”

In a recent interview, Hackett said that 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. And he said that he expects that ships will discharge very rapidly, resulting in backlog getting cargo out of the ports. Based on the most recent batch of data in this month’s report, Hackett’s prediction now looks very accurate.

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.