Port Tracker says decent volume growth could be thwarted by tariffs down the road

A good news/bad news scenario for United States-bound retailer container shipments was laid out in the most recent edition of the Port Tracker report issued by the National Retail Federation (NRF) and maritime consultancy Hackett Associates.

The good news part is the report’s projected gains in shipment levels in the coming months, and the bad news is the possibility of the ramifications of a trade war between the United States and China heating up and negatively impacting volumes further down the road.

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, Jacksonville, 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.

“Tariffs are a tax on American consumers in the form of higher prices but they are also a tax on American jobs,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “If tariffs ultimately lead to a reduction in imports and exports,  that will put dockworkers and countless others in the supply chain out of work. American consumers and workers should not be punished for China’s wrongdoing.”

For February, the most recent month for which data is available, U.S.-based retail container ports came in at 1.69 million TEU (Twenty-Foot Equivalent Units, which is down 4.1% compared to January and up 15.8% annually, with the report noting that this number is impacted due to fluctuations related to the Lunar New Year factory shutdowns in Asia.

Port Tracker estimated March would be down 1.2% at 1.54 million TEU, and April is pegged at 1.72 million TEU for a 5.8% annual gain. May is projected to be up 4.1% at 1.82 million TEU. And June, July, and August are estimated to hit 1.83 million TEU (up 6.5%), 1.88 million TEU (up 4.5%), and 1.9 million TEU (up 3.9%).  

For all of 2018, Port Tracker said it expects the first half of 2018 to be up 5.6% annually at 10.4 million TEU.

Even with the estimated gains in volumes in the coming months, Hackett Associates Founder Ben Hackett wrote in the report that a trade war could put a wrench in that momentum.

“There is nothing good about a trade war,” wrote Hackett. “It is a vicious circle of retaliation where there are no winners, only losers. President Trump has managed to start such a war and as a result is knocking trillions of dollars in value off the stock markets and will potentially cause a decline in consumer confidence. This tit-for-tat situation [with China] does not create winners. Picking a fight with the third-largest U.S. export market makes no sense.”

Hackett also noted that the report’s growth projections are being scaled back and come in at a lower level than 2017.

“The West Coast will be particularly impacted because of the tariffs as China represents over 60 percent of the volume of containerized imports into the United States,” he wrote. “It may be that industry will use some of the tax windfall to offset the tariff price increases, but that would negate much of the administration’s goal of discouraging imports from China.”