October 10, 2014
When it comes to the themes of higher than usual import volumes at United States-based retail container ports–for a few different reasons–the most recent edition of the Port Tracker report from the National Retail Federation (NRF) and maritime consultancy Hackett Associates did not disappoint.
A combination of increasing congestion at ports, the lack of a new labor contract between the Pacific Maritime Association and the International Longshore and Warehouse Union (ILWU) impacting West Coast port operations, and improving consumer confidence are aligned and have resulted in what are expected to be strong volumes as retailers endeavor to make sure they are prepared inventory-wise for the holiday shopping season.
“Increasing congestion at the nation’s ports as well as the ongoing West Coast labor negotiations are ongoing concerns and retailers are making one last push to make sure they’re stocked up for the holidays,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers are working hard to make sure customers can find what they’re looking for regardless of what happens at the ports.”
And the report explained that with the PMA-ILWU contract situation still unresolved, it led to concerns regarding potential labor disruptions having the ability to impact back-to-school and holiday merchandise. While a West Coast port strike did not materialize and negotiations are ongoing, the lack of a contract and operational issues have translated into what the report said was record congestion 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 August, the most recent month for which data is available and typically one of the highest volume months of the year, the report said that the surveyed ports handled 1.52 million TEU (Twenty-Foot Equivalent Units) and is the current record high for monthly volumes.
September is pegged at 1.48 million TEU, which would be a 2.8 percent increase, and October is expected to come in at 1.53 million TEU, which would be a 6.4 percent annual gain and a new monthly record. November and December are expected to reach 1.39 million TEU and 1.37 million TEU, respectively, for 3.7 and 3.9 percent annual gains.
Should these numbers hold, the report said that total 2014 volumes would be 17.1 million TEU, which would mark a 5.3 percent annual increase over 2013’s 16.2 million TEU. Port Tracker said that the first half of this year was up 7 percent over the first half of last year at 8.3 million TEU.
This ambitious forecast follows the NRF’s recent projection for holiday sales, for the months of November and December, to be up 4.1 percent this year at $616.9 billion and up 3.6 percent for all of 2014.
Hackett Associates Founder Ben Hackett said in the report that these projections point to a return of strong consumer spending, spurred on by lower unemployment levels, and improved consumer confidence, among other factors.
In the Port Tracker report, he wrote that despite the “gloomy” economic forecast in regards to the global economy, especially Europe, issued by the International Monetary Fund, the outlook for the U.S. is upbeat.
“The consumer is back,” he wrote. “The confidence is helping to reduce the savings ratio as borrowing rose $13.5 billion in August, and the expected surge in holiday sales is above 4 percent. That’s all good news for retailer, ports, and shipping lines.”