Port Tracker report calls for slight increase in import cargo volumes in December

Shifts in inventory management by retailers appear to have made an impact on import cargo volumes at major United States-based container ports, according to the monthly Port Tracker report by the National Retail Federation (NRF) and 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.
Port Tracker noted that December is expected to be up 0.3 percent on an annual basis.

Total volume for 2011 is now expected to come in at 14.76 million TEU (Twenty-foot equivalent units), which is down from recent estimates in the last three months of 15 million TEU, 15.4 million TEU, and 14.73 million TEU, respectively. 2010 ended up at 14.75 million TEU, which was up 16 percent compared to a dismal 2009. The 12.7 million TEU shipped in 2009 was the lowest annual tally since 2003.

“The uptick we’re expecting for December isn’t large at all but it comes after several months where retailers had reduced their imports from last year, so it’s a positive sign by comparison,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers are placing a cautious bet that consumer demand is increasing.”

While December is expected to see a slight gain, the report stated that October, the most recent month for which data is available, handled 1.28 million TEU, which is off 3.5 percent compared to September’s 1.33 million TEU and is the best single month of 2011 to date. October is down 5 percent year-over-year.

In an interview with LM, Ben Hackett, president of Hackett Associates, explained that there are clear signs that the U.S. economy is picking up, with things currently not as bad as originally expected. Among the metrics showing improvement are consumer confidence, the Institute for Supply Management’s PMI, and industrial production, among others.

“Consumers have continued to spend after Thanksgiving weekend into December,” said Hackett. “Carriers in the Far East are confirming that December is actually stronger than usual.”

Along with consumer spending showing signs of life, cautious inventory planning by retailers is also impacting freight flows and volumes, too, said Hackett. He said this was evident, with inventory being managed at or near critical levels, with a little increase in October.

But especially since Thanksgiving weekend, inventory levels are back to fairly low levels, coupled with some re-stocking occurring by retailers.

With September looking to be the best volume month of the year, Hackett was blunt in his assessment of November.

“It was not a good month for volumes,” he said. “But we are optimistic about December. Early January should be a solid due to pre-Chinese New Year production coming up at the end of January, but the last ten days of January and the first two weeks of February will likely be down sharply, which is seasonal.”

In the ocean shipping sector, rates remain depressed and capacity remains at high levels. This is happening at a time when many carriers are looking to take capacity out, especially in Trans-Pacific lanes, said Hackett. This has yet to be reflected in freight rates, but when it does Hackett said rates may increase a bit in January.

Port Tracker is pegging November at 1.18 million TEU for a 4.4 percent annual decrease, and December is expected to hit 1.15 million TEU, which would be up 0.3 percent. January is expected to reach 1.15 million TEU for a 4.8 percent decline, and February, long viewed the slowest month of the year, is predicted to hit 1.04 million TEU for a 5.7 percent decline.