Container Growth Projected to Slow Down

Container Growth Projected to Slow Down

Imports through the busiest U.S. container ports are expected to post year-to-year increases of 16 percent this month but the double-digit increases of recent months should taper off this fall, the monthly Global Port Tracker reports.

The monthly report by the National Retail Federation and Hackett Associates said retailers are becoming more cautious about inventory management while year-to-year comparisons become more difficult.

“We are still seeing increases in imports, partly because last year’s volumes made for easy comparisons and partly because of real improvements in the economy and consumer spending,” said Jonathan Gold, NRF vice president for supply chain and customs policy.

“But retailers are being cautious as they look at numbers for employment, housing and the availability of credit. There clearly can’t be consistent growth in consumer spending when customers don’t have jobs. That means retailers are going to have to manage their inventories more carefully as the year progresses. We’re still going to see increases in container volume, but not as large as what we’ve seen so far.”

Gold said that as retailers head into the summer-fall peak season for imports, they are facing tight vessel capacity and labor and congestion problems at some ports.

The 10 busiest U.S. container ports handled 1.25 million 20-foot-equivalent units in May, the latest month for which actual numbers are available. That was up 10 percent from April and 20 percent from May 2009.

It was the sixth straight month of year-over-year improvement after December broke a 28-month streak of declines. June was estimated at 1.24 million TEUs, a 22 percent increase over last year as summer merchandise arrived on store shelves.

July is forecast at 1.29 million TEUs, up 16 percent from last year; August at 1.26 million TEUs, up 9 percent; and September at 1.29 million TEUs, up 13 percent.

October, which is traditionally the highest-volume month of the year as retailers stock up for the holiday season,  is forecast at 1.24 million TEUs, up 4 percent, with November projected at 1.13 million TEUs, up 3 percent.

The first half of 2010 was estimated at 6.8 million TEUs, up 15 percent. Imports for 2009 totaled 12.7 million TEUs, down 17 percent from 2008’s 15.2 million TEUs and the lowest since the 12.5 million TEUs reported in 2003.

“The latest economic indicators are starting to look bleak, including consumer confidence, industrial production and employment numbers,” said Ben Hackett, founder of Hackett Associates, which produces the Global Port Tracker. “Sales will be slower in July and August; that much is certain. Inventories will rise, resulting in some sharp seasonal volume reductions.”

Hackett said some of the current surge in container volume reflects the fact that shipping companies have recently restored some of the services that were cut back during the recession of the past two years.

Global Port Tracker
covers the ports of Long Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast.

-- Contact Joseph Bonney at jbonney@joc.com.