Port Tracker paints optimistic picture for future container import growth

As was the case in its previous edition, growth prospects for United States-bound retail container imports in the coming months, buoyed by signs of economic improvement, appear to remain firmly in place, according to the most recent edition of the Port Tracker report issued earlier this week 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, 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.

“Consumers are spending more, and these import numbers show that retailers expect that to continue for a significant period,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “This is a clear sign that the economy has long-term momentum regardless of month-to-month fluctuations. Whether it’s merchandise for store shelves or parts for U.S. factories, imports play a vital role in American prosperity.”

For February, the most recent month for which data is available, ports in the report handled 1.43 million Twenty-Foot Equivalent Units (TEU), which was down 14.3 percent compared to an “unusually high” 1.67 million TEU in January and came on the heels of Asia-based factories shutting down in advance of the Lunar New Year. Last month’s report estimated February would hit 1.61 million TEU.

What’s more, the report noted lower volumes in February are not unexpected, as February 2017 was down 7 percent annually, and it follows the holiday season and is in advance of retailers building up summer inventory levels, as well as being the slowest month of the year, too.

For March, Port Tracker estimates imports will be up 21.5 percent annually from what it called unusually low numbers for March 2016, as the Lunar New Year was a week later than it was in 2017.  April is projected to be up 10.3 percent annually at 1.59 million TEU, and May is looking at a 3.5 percent uptick at 1.68 million TEU. June and July also look to be growing at 1.66 million TEU (a 5.3 percent increase) and 1.71 million TEU (up 5.1 percent annually).

The report also noted that these growth estimates match up well with its growth estimate of 9.6 million TEU for a 7.3 percent annual increase in the first half of 2017. And it also measures well compared to the NRF’s projection of retail sales rising between 3.7 and 4.2 percent in 2017 compared to 2016.

Hackett Associates Founder Ben Hackett said that he expects imports to remain stable even though the “uncertainties of the new administration’s trade policies remains unchanged, adding that “despite pre-election promises, there has been little real change in trade policy so far and little change is expected for the greater part of the year.” 

Even with a fairly positive outlook, Hackett wrote in last month’s report that

There are also some tailwinds to keep an eye on, too, including the threat of a “border adjustment” tax, withdrawal from the Trans-Pacific Partnership and a possible rewrite of the North American Free Trade Agreement, which might eventually dampen the trading spirit and discourage international trade.

Conversely, though, he explained that the opposite is happening, with trade continuing to grow despite these developments in Washington. And even though imports are growing, retailers are doing a better job of balancing inventory and sales. The inventory-to-sales ratio has come off its 2016 peak of 1.4 and was down to 1.35 in December, the latest reported data. He noted that is still high compared with the previous three years but he expects it go down further, closer to 1.3.

Hackett added that consumer confidence is expected to remain strong for the foreseeable months and will continue to support growth in imports, noting that because of this it has adjusted its forecasts upwards.

“Risks are minimal at this stage and if the proposed $1 trillion infrastructure program takes off in the coming year, then perhaps the growth will be sustained,” he wrote. “There is, however, a fair amount of uncertainty which can slow trade as well.”