Despite current weather, spring is in the air, says Port Tracker report
March 10, 2014 - LM Editorial
Despite one of the harshest winters in years, spring is coming sooner than later and that was reflected in 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.
Coming off of February, which is typically the slowest month of the year, the report expects to be March much better, with retailers starting to stock up for spring and summer.
“Retailers are bouncing back from the annual post-holiday slowdown and getting ready for the surge in activity that comes each year as the weather warms up,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Shelves are going to be well-stocked with everything from bathing suits to barbecues. Congestion has been a problem for many ports during this slowdown, so operations will need to improve to handle the expected surge in the coming months,” Gold said, adding that cargo movement at some ports has been slowed by a various issues, including severe winter weather and shortages of labor and equipment.
The report said that March is expected to see a 12.4 percent gain, due to the expected increase in imports on behalf of retailers gearing up for the coming months
January is the most recent month for which data is available in the report, and the report said that the surveyed ports handled 1.36 million Twenty-Foot Equivalent Units (TEU), which increased 5.3 percent over December and was up 4.1 percent annually. Total 2013 volume for these ports came in at 16.2 million TEU, which was up 2.3 percent compared to 15.8 million TEU in 2012.
February is expected to be down 8.8 percent at 1.17 million TEU, and March is expected to see the aforementioned 12.4 percent gain at 1.28 million TEU. April is expected to be up 5.1 percent at 1.36 million TEU, with May projected to see a 3.7 percent increase at 1.44 million TEU. June and July are expected to be up 5.3 percent and 3.4 percent, respectively, at 1.43 million TEU and 1.49 million TEU. The current volume projection for the first half of the year is 8 million TEU, which would be a 3.5 percent gain compared to the first half of 2013.
Hackett Associates Founder Ben Hackett told LM that even though the report has some encouraging themes regarding volume increases in the coming months there are things to be wary about as well.
Those things, he explained, include: a still too high inventory-to-sales ratio, which signals slow retail sales and low consumption; declining exports out of China; and lower inflation rates, which can potentially lead to deflation and prices dropping in conjunction with lower consumption as businesses shutter production lines due to fewer sales, which can lead to lower employment levels.
But on the positive side, fourth quarter GDP of 2.4 percent, while lower than its previous estimate of 3.2 percent, is still solid growth, especially when compared to Europe’s low growth levels, according to Hackett. Another positive for U.S. growth he cited is the unemployment rate below 7 percent.
“At the end of the day, it all depends on consumption,” Hackett said in the report. “We cannot escape the basic tenant of economics that demand determines growth or weakness. Somehow, the average consumer needs to be given the economic confidence to go out and spend. Without that, the economy will remain weak and no amount of tinkering by the Federal Reserve will have much of an impact.”
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