This fall has brought something absent in 2011: a peak season for containerized import shipments of holiday goods.
But hold off on the celebration. Consumer demand remains shaky, recent increases are inflated by comparison with last year’s weak summer-fall volumes, and this year’s data may be skewed by stockpiling in advance of a threatened East and Gulf Coast dock strike. Container ship lines and cargo intermediaries say increases have been tepid and that shippers remain cautious.
Despite all that, most forecasters expect another year of gradual recovery in the U.S. consumer spending that underpins demand for containerized imports. “We’ll have a modest peak season,” Journal of Commerce Economist Mario O. Moreno said. Year-over-year comparisons are with weak volumes in 2011, he noted, and retail and housing demand remains tepid.
The monthly Global Port Tracker report by the National Retail Federation and Hackett Associates estimated August volume at the 10 busiest U.S. import gateways rose 4.4 percent to 1.43 million 20-foot-equivalent container units.
Port Tracker forecasts September at 1.49 million TEUs, up 8.5 percent, and October at 1.48 million TEUs, up 11.7 percent, followed by 1.32 million TEUs in November, a 1.9 percent increase, and 1.25 million in December, up 2.7 percent.
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“There is a peak season. It’s nothing phenomenal, but nevertheless it’s there,” said Ben Hackett, founder of Hackett Associates. He said much of the year-over-year increase comes from a slowly improving U.S. economy, not a surge in demand for holiday merchandise. The volume of containerized import numbers in June rose faster than total import value, he noted, suggesting growth in basic goods instead of luxuries.
Retail inventories rose in July for the fourth consecutive month. Rising inventories usually suggest optimism about future sales, but Hackett said some of that could be due to anticipatory buying by shippers concerned about an International Longshoremen’s Association strike at the end of this month.
Data from PIERS, a Journal of Commerce sister company, show imports increased at most East Coast ports in July while West Coast volumes declined. Importers of goods and commodities such as automotive parts and coffee brought in shipments early.
Diversions from the East Coast are expected to boost import volumes through October, Hackett said. Tight West Coast vessel capacity and carriers’ plans to impose congestion surcharges of $1,000 per box on all shipments if there’s an East Coast port shutdown, however, could limit cargo diversion.
How much cargo has been diverted or shipped early is impossible to determine, but retailers have engaged in some inventory building. “The flip side of this is that this could leave retailers overstocked if sales are lower than expected, but there is no evidence to give this much credence,” Hackett said. “Labor issues aside, overall we’re still feeling optimistic about the remainder of the year.”
He said he expects imports through the largest U.S. container gateways to rise 4 to 5 percent for the year. Through July, volumes were up 4.2 percent. “For that to weaken in the last five months of the year, there would have to be a disaster, and I’m not seeing that,” Hackett said.
Moreno has raised his full-year forecast for containerized imports through all U.S. ports to 4.6 percent from the 4.1 percent he forecast in June. He said second quarter import volume edged up only 2.9 percent, but he expects increases of 7.9 percent in the third quarter and 5.3 percent in the fourth.
Back-to-school sales, which represent the largest retail season except for the Christmas holiday, appeared to be solid. The International Council of Shipping Centers said August same-store sales, excluding Wal-Mart, rose 2.6 percent from a year earlier.
The Commerce Department said total retail and food services sales, which exclude non-general merchandise categories such as automobiles, gas stations and restaurants, rose a seasonally adjusted 0.9 percent from July and increased 4.7 percent unadjusted from August 2011.
Jack Kleinhenz, chief economist at the National Retail Federation, said retail growth continues, but consumers remain cautious about discretionary spending. “Consumers have carried much of the growth during the economic recovery, despite high food and gas costs,” he said. “Though the economy isn’t backsliding, growth continues to be a sore point.”
U.S. consumer borrowing decreased in July for the first time in almost a year, as credit card debt declined for the second straight month, the Federal Reserve reported this month. Economists said the report indicated households remain wary of taking on debt.
“This year’s retail spending patterns are best described as fits and starts,” Chris G. Christopher Jr. of IHS Global Insight said in a recent commentary. “The first quarter was strong, second quarter weak, and the third is looking up. Consumers hunker down and then bounce back. Clearly, this is indicative of a cautious American consumer.”
Most measures of household confidence declined in August. The Conference Board’s index decreased to 60.6 from a revised 65.4 in July, the biggest one-month decline since last October. The Reuters/University of Michigan survey rose slightly, but both it and the Conference Board index remain in recession territory.
Consumers are unwilling to open their wallets wide as long as unemployment rates remain above 8 percent and housing markets struggle to build momentum, Moreno said.
Sales of existing homes are a key to demand for furniture, home furnishings and appliances. Furniture annually accounts for about 10 percent of U.S. containerized imports. Furniture import volume edged up 4.8 percent in the first half of this year, PIERS data show.
Existing-home sales rose to an annual rate of 4.47 million units in July, the highest in eight months, according to the National Association of Realtors. Sales have improved since reaching an annual rate of 3.39 million in July 2010, but remain well below the peak of 7.25 million in September 2005.
Moreno said improvement in the jobs market is needed to stimulate demand for home sales. Job growth, he noted, has averaged 100,000 a month in the last six months to August. “We need to be adding at least 150,000 jobs a month to boost a more steady growth in home sales,” he said.
Contact Joseph Bonney at email@example.com. Follow him on Twitter @josephbonney.