Port Tracker report calls for volume declines beginning in November

As holiday shipping activity recedes into the background, import cargo volumes at major United States-based container ports is expected to decrease in November, according to the monthly Port Tracker report by the National Retail Federation (NRF) and 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.

Port Tracker indicated that November is expected to dip 1.9 percent on an annual basis, following a Peak Season that to a large degree failed to materialize as once envisioned.

Total volume for 2011 is now expected to come in at 14.76 million TEU (Twenty-foot equivalent units), which is down from recent estimates in the last two months of 15 million TEU and 15.4 million TEU, respectively. 2010 ended up at 14.75 million TEU, which was up 16 percent compared to a dismal 2009. The 12.7 million TEU shipped in 2009 was the lowest annual tally since 2003.

“As always, retailers are being very strategic with their supply chains,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Although sales are expected to be in line with the 10-year average, retailers are keeping inventory levels extremely lean and filling their stores wall-to-wall with discounts and promotions. Unlike in 2008, when the financial crisis caught everyone off-guard, retailers have a strong understanding of the consumer mindset this Christmas.”

With November expected to fall 1.9 percent annually, the report also indicated that September, the most recent month for which data is available, hit 1.33 million TEU, which was up 0.4 percent over August and down 0.6 percent from September 2010. September is the busiest month of the year to date as retailers were quick to stock shelves for the holiday season, according to Port Tracker. October was estimated at 1.32 million TEU, but complete data will not be available until the next report is released.

Ben Hackett, president of Hackett Associates, told LM that September’s numbers were somewhat surprising, with expectations being higher than what the numbers were.

“We were expecting a slight increase of a few percentage points, nothing major,” said Hackett. “We were looking for an indication of some re-stocking activity going on, but that clearly was not the case. Part of that may be due to a week-long holiday in China that could have depressed shipping activity. October does not look better at this point.”

Normally, when an event like the one in China happens, Hackett said there is a surge of cargo ahead of time, but that did not happen this time around.

Port Tracker is pegging December at 1.11 million TEU for a 3.3 percent annual decrease, and January is expected to hit 1.1 million TEU, which would be off by 8.7 percent. As the slowest month of the year, February is expected to hit 996,816 TEU for a 9.4 percent decline, and at 1.08 million TEU March would be down 1.06 percent.

Looking ahead, Hackett said that there is a possibility volumes could pick up by March or April, provided that there are no issues with the Euro and the economy gains traction.

And this also is contingent on capacity patterns, too, with there still being a surplus of available capacity compared to lower demand.

“On the Trans-Pacific lanes, capacity has been coming down,” said Hackett. “It could stand to have a little bit less capacity as compared to certain [Eastern] parts of Europe, where less capacity has been taken away and resulted in a bloodbath on pricing and rates there. The Trans-Pacific is more stable in that sense, and freight rates have stopped dropping finally. But they dropped for a long time, and many bigger carriers have pulled a number of services out for the winter months, which is seasonal.”

Earlier this year, the NRF predicted holiday sales for the months of November and December would increase 2 percent annually at $465.6 billion. Hackett said that at this point this seems in line to date, with the hope that it will result in higher U.S.-bound imports that could result in higher than currently expected November TEU estimates.