Port Tracker report points to import growth with tariff hikes expected

The theme of tariffs influencing increased import activity at United States-based retail container ports, coupled with rising retail sales, remains fully intact with according to the Port Tracker report, which was released today by 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, 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.

“Much of this is driven by consumer demand but retailers are likely to resume stocking up merchandise before new tariffs can take effect,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Tariff increases and new tariffs will mean higher costs for U.S. businesses, higher prices for American consumers and lost jobs for many American workers. We encourage the administration to stay focused on a trade agreement, and we hope the negotiations will get back on track. It would be unfortunate to undermine the progress that has been made with more tit-for-tat tariffs that only punish Americans.”

While 2018 saw a flurry of “pull forward” import activity, due to tariffs, the report pointed out that subsided somewhat, when President Trump postponed a scheduled increase in tariffs from January to March of this year, which was followed by the planned tariffs being put on hold indefinitely, as U.S.-China talks were seen as progressing, with an eye on a trade deal being reached by late May or early June. But now, bets of a deal between the U.S. and China appear to be off, as the White House indicated this week that 10% tariffs on $200 billion worth of Chinese goods will increase to 25% tomorrow, as well as plans to levy 25% tariffs on most remaining Chinese goods later at a later date.

U.S. ports covered in the report handled 1.61 million Twenty-Foot Equivalent Units (TEU) in March, the most recent month for which after-the-fact numbers are available, for a 0.6% decrease compared to February and a 4.4% annual gain. April is estimated to come in at 1.76 million TEU (a 7.7% annual gain), and May is pegged to hit 1.9 million TEU for a 4.2% increase. June, July, and August are expected to hit 1.92 million TEU (a 3.7% increase), 1.96 million TEU (a 3% increase), and 1.98 million TEU (a 4.6% increase), respectively. September is projected to come in at 1.91 million TEU for  2% annual gain.

The report observed that monthly imports have never reached the 1.9 million TEU mark in a year before July, adding that the August forecast would mark the highest-volume month going back to October 2018’s 2 million TEU. And it added that the first half of 2019 is expected to hit 10.7 million TEU for a 3.9% annual gain.  

Hackett Associates Founder Ben Hackett wrote in the report that despite the ongoing tariff situation consumer confidence remains strong, while cautioning there are things monitor.

“The national savings ratio is rising after eight months of decline in 2018,” wrote Hackett. “The growth in personal income is not translating into a similar growth in expenditures after the December 2018 rise. To make matters worse, consumption is facing the potential of increased tariffs on Chinese imports if President Trump’s Tweets are anything to go by. One can only hope that this is a simple negotiating tactic that will run out of steam.”

Looking at 2019 over all growth, Hackett noted that he expects total growth for the year to come in at 2.6%, with the West Coast to be up 1.9% and the East Coast to be up 3.1%.