Subscribe to our free, weekly email newsletter!


Port Tracker says future look positive, but West Coast port labor talks loom

By Jeff Berman, Group News Editor
May 07, 2014

Growth is anticipated in the coming months at U.S. retail container ports despite some looming challenges along the way, according to the most recent edition of the Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates.

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.

Future volumes to a degree are contingent on contract talks for West Coast dockworkers that are slated to kick off next week between the Pacific Maritime Association and the International Longshore and Warehouse Union, according to Port Tracker. With the current contract set to expire on June, 30, the NRF is calling on both parties to avoid potential disruptions that could affect the flow of back-to-school or holiday season merchandise.

“We’re expecting a lot of cargo to move through the ports this summer and we want to make sure there aren’t any supply chain disruptions that would impact the cargo flow,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “We hope there won’t be any issues, but the sooner labor and management can agree on a new contract, the better it will be for everyone who relies on the West Coast ports.”

The report highlighted the importance of successful negotiations, pointing to the ten-day West Coast ports shutdown, which resulted in a significant backlog and caused an estimated $15 billion in reported losses.

For May volumes, Port Tracker expects to see a 3.5 percent increase at 1.44 million TEU (Twenty-foot Equivalent Units). And for March, the most recent month for which data is available, total volume came in at 1.3 million TEU for a 5.1 percent sequential gain over February, which is usually the slowest month of the year, and up 14.5 percent annually.

The report estimated April volumes to be up 6.1 percent annually at 1.38 million TEU along with the aforementioned 3.5 percent May gain. June and July are expected to be up 5.6 percent and 3 percent, respectively, at 1.43 million TEU and 1.49 million TEU, with the first half of 2014 expected to be up 5.1 percent at 8.2 million TEU.

Hackett Associates Founder Ben Hackett wrote in the report that “most economic fundamentals are pointing in the direction of continued sustained recovery in consumer demand and import volumes, much as we had projected. This is turning out to be the longest period of growth for some time now.”

But as he has in recent months, Hackett expressed concern about a still too high inventory-to-sales ratio, which is higher than usual, which he said could be due to a mix of rate negotiations and fear of industrial action. And he explained that should import growth continue as is expected, the data will show that the ratio declined in March and April before leveling out again.

“Part of the inventories built up due to bad weather, with things not moving” said Hackett in an interview. “Personal consumption compared to income was also pretty flat, with people not buying at the same levels as usual, so the importers were sitting on more inventory than they usually would. And with rate negotiations now at an end, importers are bringing in cargo earlier rather than waiting, which is a reason inventory was going up. If we continue to see a rise in inventory after April, that would indicate something is wrong. It would be more of a problem for carriers, though, as vessels will not be as full as they would like them to be in June and July. But if inventory drops, it is a positive sign and says we are on the right track for continued growth.” 

Carriers need to focus on capacity management in light of weak freight rates in 2014, with shippers looking to leverage that situation, according to Hackett. Extra capacity remains an issue for ocean carriers, with competition among members of the same shipping alliances, too, he said, which means they need to focus on managing capacity better or run the risk of having empty vessels.

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The International Air Transport Association (IATA) announced August 2014 data for global air freight markets showing continued “robust”growth in air cargo volumes.

Even though some of its key metrics dropped sequentially from August to September, the outlook for manufacturing over all remains strong, according to the most recent edition of the Manufacturing Report on Business issued today by the Institute for Supply Management (ISM).

Company officials said that these planned changes, which will take effect on January 4, 2015, will provide for increases in current pay rates and reduce the time it takes for its nearly 15,000 drivers to reach top pay scale.

While the economy has seen more than its fair share of ups and downs in recent years, 2014 is different in that it could be the best year from an economic output perspective in the last several years. That outlook was offered up by Rosalyn Wilson, senior business analyst at Parsons, and author of the Council of Supply Chain Management Professionals (CSCMP) Annual State of Logistics Report at last week’s CSCMP Annual Conference in San Antonio.

Matching last week, the average price per gallon of diesel gasoline dropped 2.3 cents, bringing the average price per gallon to $3.755 per gallon, according to the Department of Energy’s Energy Information Administration (EIA).

Article Topics

News · Port Tracker · NRF · Hackett Associates · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA