Increasing import activity remains main theme of Port Tracker report

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By Jeff Berman, Group News Editor
August 12, 2014

In echoing what has become a common refrain in recent months, the monthlyPort Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates continues to call for increased import activity at United States-based retail container ports.

The main drivers for higher import levels, the report said, stems from a new labor agreement between the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) still not complete, although West Coast ports are still fully operating while talks continue, coupled with retailers being concerned about a new deal not yet reached, resulting in higher import levels.

“The negotiations appear to be going well but each week that goes by makes the situation more critical as the holiday season approaches,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers are making sure they are stocked up so shoppers won’t be affected regardless of what happens at the 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, 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.

For the month of August, Port Tracker stated that imports are expected to hit an all-time record at 1.54 million TEU (Twenty-Foot Equivalent Units), which would be up 3.6 percent annually and be the highest import volume for any month since 2000, when NRF first started tracking import volumes.

June, the most recent month for which data is available, came in at 1.48 million TEU for a 9.1 percent annual increase, and July is estimated to reach 1.53 million TEU for an impressive 5.8 percent gain over July 2013. With the aforementioned August volumes pegged at 1.54 million TEU, September is expected to reach 1.48 million TEU for a 4.8 percent improvement, and October is also expected to hot 1.48 million TEU for a 3.3 percent uptick. November and December are projected to come in at 1.37 million TEU and 1.34 million TEU for 2 percent and 2.1 percent gains.

If these numbers hold, Port Tracker said that 2014 imports would reach 17.1 million TEU, which would be 6.2 percent higher the 16.2 million TEU recorded in 2013. The first half of 2014¬¬–at 8.3 million TEU-is up 6.9 percent annually.

Hackett Associates Founder Ben Hackett wrote in the report that even with import levels high because of the uncertainty surrounding the West Coast port labor situation, trade volumes are in a good place, due to U.S. GDP increasing in 11 of the last 12 quarters.

Hackett explained that a significant proportion of the import gains is due to the labor negotiations, with importers moving up shipments just in case, as well as an increase in private consumption, with consumer spending up 2.5 percent in the second quarter.

“The impact of this is that the Peak Season will be muted, suggesting that the monthly growth rates will be less than the seasonal norm,” he wrote. “Due to the jump in July imports, our West Coast projections were well up but not strong enough as we had anticipated more of a shift to the all-water route. Clearly, economic fundamentals are no match for cautionary measures to safeguard against labor relations.”

In an interview with LM, Hackett said it is like that the June and July inventory-to-sales ratio will show an uptick, due to importers bringing in large amounts of cargo early.

And he added this could result in increased activity at ports, due to larger vessels calling that could increase pressure on terminal and supply chain operations.

“Ships are pretty full, but part of the reason for that is that a lot of capacity was taken away, even though volumes are going up so in a sense it is sort of a slight of hand type of thing going on,” said Hackett. “Things will return to a more seasonal nature after October in all likelihood.”