Volumes expected to head up while excess ocean capacity issues remain, notes Port Tracker report

Seasonal cargo flows appear set to take hold for United States-based retail container ports even with a glut of Transpacific trade capacity, according to the most recent edition of the Global Port Tracker report by the National Retail Federation (NRF) and maritime consultancy Hackett Associates.

NRF Vice President of Supply Chain Policy Jonathan Gold said that while consumers are out purchasing back-to-school items, holiday gift items are beginning to arrive on docks in advance of the holiday season. And although there are still some lingering congestion issues (due to the West Coast port labor situation, which was resolved earlier this year), Gold said retail partners are collaborating with supply chain partners to ensure all their imported merchandise “flows smoothly to store shelves.”

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 June, the most recent month for which data is available, reached 1.57 million TEU (Twenty-Foot Equivalent Units), which the report said was down 2.5 percent compared to a very busy May and up 6.2 percent compared to June 2014

Port Tracker estimates July at 1.59 million TEU for a 6 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 1.57 million TEU (for a 3.6 percent annual increase), 1.59 million TEU (for a 0.1 percent annual decrease), and 1.58 million TEU (for a 1.2 percent annual increase), respectively.

The first half of 2015, the report said, saw 8.9 million TEU, which was up 6.5 percent annually, and also up from a previous estimate of 8.8 million TEU, with all of calendar 2015 pegged at 18 million TEU for a 4.2 percent annual gain.

Hackett Associates Founder Ben Hackett observed in the report even with typical seasonal gains being called for in the coming months, the ocean freight capacity and spot market outlook is replete with what he described as chaos on the high seas.

“One has to wonder why carriers cannot manage their affairs in such a way as to find a way to match supply to demand,” Hackett wrote in the report.

An underlying reason for this, he explained is because of regulatory rules that prohibit collusion between carriers to fix prices or jointly manage capacity, with the latter being more flexible, due to carrier alliances that enable them to manage capacity to a degree, but “in reality even within alliances there appears to be an inability to work out the supply/demand situation.”

What’s more, Hackett noted that the large 10,000-plus TEU vessels placed into service due to the result of cascading of Asia-Europe trade have mostly benefitted Transpacific and Transatlantic trades, as these larger vessels are displacing 4,000-to-6,000 TEU vessels on the Transpacific route.

“Demand remains healthy, but not healthy enough to cover the excess supply being dumped onto the Transpacific trade route,” wrote Hackett. “The end result will be a highly volatile situation of freight rates moving up and down, which may encourage the Federal Maritime Commission to open an investigation, much as they are concerned about port productivity and container dwell times.”