Expectation of lower U.S.-bound import volumes remains intact, notes Port Tracker

The ongoing thesis of retail container port volumes falling to their lowest volumes over the balance of the remainder of 2022 since early in 2021 remains on tracks, despite retail sales still showing growth, according to the new edition of the Port Tracker report, which was issued today by 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; 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.

“The holiday season has already started for some shoppers and, thanks to pre-planning, retailers have plenty of merchandise on hand to meet demand,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Many retailers brought in merchandise early this year to beat rising inflation and ongoing supply chain disruption issues. Despite the lower volumes, retailers are still experiencing challenges along the supply chain, including U.S. ports and intermodal rail yards.”

For August, the most recent month for which data is available, import volume—at 2.26 million TEU (Twenty-Foot Equivalent Units)—was 3.5% above July and off 0.4% annually, marking the fourth annual decline in the last two years (through August) and for the second time since December 2021.

For the following months, Port Tracker issued the following projections:

• September, at 2.07 million TEU, for a 3% annual decrease;
• October at 2 million TEU, for a 9.4% annual decrease;
• November, at 2.01 million TEU, for a 4.9% annual decrease;
• December, at 1.96 million TEU, for a 6.1% annual decrease (which would mark the lowest-volume month going back to 1.87 million TEU in February 2021);
• January, at 2.06 million TEU, for a 4.9% annual decrease; and
• February, at 1.8 million TEU, for a 15% annual decrease (driven by a typical seasonal slowdown, due to Lunar New Year factory shutdowns in Asia)

The report explained that the projected 15% February decline is related to import numbers remaining high, due to backed-up cargo that kept ports busy throughout February 2021.

Total first half 2022 volume came in at 13.5 million TEU, for a 5.5% annual increase, with the report calling for the second half of the year to hit 12.5 million TEU, for a 4% annual decrease, with total 2022 volume expected to be up 0.7% over the current record of 25.8 million TEU set in 2021, to 26 million TEU.

Hackett Associates Founder Ben Hackett wrote in the report that the growth in U.S. that the growth in U.S. import volume has run out of steam, especially for cargo from Asia.

“Recent cuts in carriers’ shipping capacity reflect falling demand for merchandise from well-stocked retailers even as consumers continue to spend,” he wrote. “Meanwhile, the closure of factories during China’s October Golden Week holiday along with the Chinese government’s continuing ‘Zero Covid’ policy have impacted production, reducing demand for shipping capacity from that side of the Pacific as well.”

Hackett added that slowing wage gains, rising interest rates, and less discretionary spending on non-essential goods suggest that the economy is losing steam and slowing down, leading some to speculate that there is potential of a recession early next year.