Port Tracker report calls for steady gains to finish 2015

The theme for the 2015 holiday season in terms of holiday season import cargo volumes could well be “holding steady,” according to the most recent edition of the Global Port Tracker report from 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.

“The holiday season is well under way and merchants are doing the final balancing act of matching supply to demand,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Retailers went into the season with strong inventories that ensured consumers would have a good depth and breadth of selection, and that should hold true for the remainder of the season.”

As previously reported, the combination of West Coast port labor issues, which hindered port production and throughput from late last year into the first quarter of this year, being settled, and the NRF’s forecast of 3.7 percent annual holiday sales gains (for the months of November and December) are expected to drive import volume gains through the end of 2015 and into early 2016.

The Port Tracker report said that for October, the most recent month for which data is available, handled 1.56 million TEU (Twenty-Foot Equivalent Units), which it said was down 4.1 percent compared to September and down 0.1 percent compared to October 2014. Port Tracker estimates November to hit 1.5 million TEU for a 7.4 percent annual gain, with December pegged at 1.44 million TEU for a 0.1 percent annual decline. The report’s authors said should these numbers come to fruition the final 2015 tally would be up 5.5 percent over 2014 at 18.3 million TEU. The first half of 2015 was up 6.5 percent annually at 8.9 million TEU.

For the first quarter of 2016, the report is calling for atypical volumes, due to the varying changes brought about by the changes incurred prior to a new West Coast port labor contract being reached. And for the first half of 2016, the report expects West Coast port volumes to be up 1.6 percent, whereas East Coast ports are expected to be down 1.6 percent for the same period.

January is expected to be up 17.9 percent at 1.46 million TEU, and February is estimated to come in at 1.4 million TEU for a 16.9 percent annual gain. March is predicted to be down 22.4 percent annually at 1.35 million TEU, due to large volumes, which arrived at ports following a new labor contract being reached at the same time in 2015. More normal volume trends are expected to kick in by April, with the report expecting a 0.3 percent annual decrease at 1.51 million TEU.

While holiday volumes may be steady, Hackett Associates Founder Ben Hackett wrote in the report the inventory-to-sales ration remains “stubbornly high” at levels not seen since the recession in 2009, coupled with slow retail sales growth and an increase in personal savings and a matching increase in credit card usage.

Another factor impacting inventory-to-sales ratio and import cargo volumes, he observed, is lower manufacturing output, with new orders and employment still growing but at slower rates.

In an interview, Hackett said there are a few different things to focus on when looking at current import levels.

“Consumer confidence has decreased and is a concern at some level,” he said. “The inventory-to-sales ratio, manufacturing PMI, and savings rate gains in tandem with increased credit card activity are the things to keep an eye on. It is a mixed bag of economic fundamentals, with nothing definitive saying things are going well or going badly.”

With the report expecting more normalized import flows by next April, Hackett said that is contingent on inventory levels coming down, with the assumption that they should.

“The major thing that needs to happen to ensure inventory levels do in fact decrease is if disposable income levels increase,” explained Hackett. “If that happens, things should be OK. The personal savings ratio is outpacing the personal expenditures, which means there is a gap there with consumers saving more money, which is propping up the savings ratio.”