Port Tracker report pinpoints U.S.-China trade war as focal point of import volumes

In advance of a new round of tariffs on United States-bound consumer goods from China, set to take effect on December 15, the most recent edition of the Port Tracker report, which was issued today by the National Retail Federation (NRF)  and maritime consultancy Hackett Associates showed a significant increase in November volumes, at United States-based retail container ports.

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, Jacksonville, 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.

Following a tentative agreement on a partial trade deal between the U.S. and China in October, which has yet to be made official, the report noted that a new round of tariffs on U.S.-bound consumer goods is set to take effect on December 15. Not surprisingly, the ongoing “trade war” and related ongoing tension between the U.S. and China remains a focal point of the report’s findings.

“At this point, holiday merchandise is already in the country, so the direct impact of new tariffs won’t be seen until the season is over,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Nonetheless, tariffs are bad for both consumer and business confidence, and we hope that the December tariffs will be canceled or postponed as a sign of good faith. We need a deal with China as soon as possible so we can bring an end to the trade war that has put a drag on the U.S. economy for far too long.”

U.S. reports covered in the report handled 1.95 million Twenty-Foot Equivalent Units (TEU) in October, the most recent month for which data is available, which is up 0.6% over September’s 1.97 million TEU and down 7.5% annually compared to the 2 million TEU handled in October 2018, which stands as the all-time monthly record.   

Port Tracker said that November is projected to come in at 1.95 million TEU, which would represent an 8% annual increase and serve as an indication of retailers front loading, or pulling forward, imports in advance of the scheduled December tariffs. Should this number come to fruition, November would mark the highest volume month on record since August 2019, which came in at 1.97 million TEU, also a pull forward month ahead of tariffs the following month. For all of 2019, the report said that a new record is expected, at 21.9 million TEU, which would mark a 0.8% annual gain over 2018’s current record of 21.8 million TEU.

For the first quarter of 2020, January is pegged at 1.87 million TEU, a 1.2% annual decrease, and February, which is typically the slowest month of the year due to the Lunar New Year factory shutdowns in Asia, is expected to be down 0.3%, at 1.62 million TEU. And March, at 1.76 million TEU, is poised to rise 9.2%, due to what the report referred to as fluctuations related to the Lunar New Year calendar. 

Hackett Associates Founder Ben Hackett wrote in the report that it is clear the U.S. economy has “shrugged off the slowdown in the economy,” noting that while overall economic growth has slowed down, the pairing of low unemployment and higher wages have helped to spur purchasing and consumer goods imports to levels that have helped to keep GDP growing at a steady rate.

But even though consumer activity has been positive, there are concerns on the manufacturing side, with the Institute for Supply Management’s key metric for measuring manufacturing growth, the PMI, having shown declines from August through September, due, in large part, to new order declines.

And Hackett also observed that the decline in import values could be due, in part, to overseas importers cutting prices, and related to tariffs and the threat of tariffs heading up.