Port Tracker report expects 8.4 percent decline in February import volumes

As per the usual, February volumes at U.S.-based retail container ports are expected to see an annual decline, 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.

The report said that February is projected to see an 8.4 percent drop, due to the shipping cycle reaching its slowest month of the year.

December is the most recent month for which data is available in the report, and the report said that the surveyed ports handled 1.3 million Twenty-Foot Equivalent Units (TEU), which dipped 3.3 percent compared to November and was up 0.6 percent annually. With December in the books, 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.

“Ports and distribution centers are getting the break they deserve after the busy holiday season, but it won’t last long,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers will be moving spring merchandise toward their shelves in just a few weeks, and early numbers point to a busy season ahead.”

Along with February expected to be down 8.4 percent at 1.17 million TEU, the report said that January is estimated to be up 4.5 percent at 1.37 million TEU, and March is expected to see a 13.7 percent jump at 1.29 million TEU. The remainder of the first half of the year looks promising with: April up 6.9 percent at 1.39 million TEU; May up 4.2 percent at 1.45 million TEU, and June up 5.6 percent at 1.43 million TEU. Should these numbers hold true, first half volumes would be up 4.3 percent annually at 8.1 million TEU.

In terms of consumer activity, Hackett Associates Founder Ben Hackett wrote in the report that there is continued hesitancy in spending as net disposable income remains virtually flat, and subsequently he explained that the inventory-to-sales ratio remains stubbornly high as importers continue to hold onto extra stock. While this was previously believed to be due to government uncertainty in the form of sequestration, shutdowns, and the tapering of Federal Reserve stimulus, he said that does not appear to be the case as there are recent declines on Wall Street that still is a high level of consumer uncertainty and concern over the future of their economic well-being.

Even with this type of uncertainty intact, this sentiment follows a recent announcement from the NRF that pegged 2014 retail spending to head up 4.1 percent annually, which is dependent on what happens in Washington in terms of policies and how they could impact consumer confidence.

“We have indeed reached a situation where the probability of strong growth-not experienced for over six years-is a thing of the past,” wrote Hackett. “What that means is ports, terminal operators, transportation providers and retailers need to adjust their long-term planning for lower levels of volume. In our view, less than five percent per year can be expected, excluding market-share shifts, of course.”

Hackett recently said that that the inventory-to-sales ratio is still high at a time when it should be declining seasonally, which could mean that current GDP growth is stemming from the services sector, while albeit not a negative but it could translate into retail sales not being the growth engine for import volumes.

But even if that is the case Hackett said that expectations of a stronger dollar could help top bolster consumer confidence with import prices falling.

“We are seeing a trend from 2011 into 2014 if each peak getting higher and the troughs are getting less than we have had in the past, which serves as a confirmation that the recovery is ongoing,” Hackett said.