Ocean cargo/Global logistics: Port Tracker calls for continued-but smaller-gains

While the forecast for import cargo volume at U.S.-based retail container ports remains positive, the amount by which volumes rise on a monthly basis is expected to narrow in the coming months, according to the most recent Port Tracker report by the National Retail Federation and Hackett Associates.

The report said July volumes are expected to rise by 16 percent year-over-year. Retail container volumes saw declining volumes for 28 months through November 2009.

This year began with sequential gains in December and January, followed by a decline in February. March volumes—came in at 1.07 million TEU (Twenty-foot Equivalent Units), which was up 7 percent from February’s 1.01 million TEU and 12 percent year-over-year. April volumes at 1.15 million TEU—were up 7 percent from March and 16 percent year-over-year. And May—the most recent month for which data is available—hit 1.25 million TEU, marking a 10 percent improvement from April and a 20 percent annual gain—the sixth straight month for annual volume increases.

The ports surveyed in the report include: Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston, and Savannah.

With the first half of 2010 likely to finish in decent shape, sustained success in the second half of the year is not as certain, according to Ben Hackett, founder of Hackett Associates.

“Consumers have become a bit scared again, according to the most recent Consumer Confidence index reading, which was down significantly,” said Hackett. “It is an indication of hesitancy by consumers and their willingness to spend more, as opposed to just working down debt.”

Other economic indicators that indicate a slowing economy include: the Institute of Supply Management’s PMI, which showed a slight decline in June,  and today’s announcement from the Department of Commerce, which reported that wholesale inventories in May 2010 were $398.8 billion, up 0.5% from April but down 2.1% from 2009.  Commerce added that sales were $350.6 billion, down 0.3% from the prior month and up 15.1% from the prior year.

And with Peak Season approaching sooner than later, inventory management will be closely watched cautiously by shippers in conjunction with demand levels, too. Lower inventories will be reflected in a slowing down of the monthly growth rates in Port Tracker.

“The monthly numbers have reached a point where continued growth [on the same level] looks questionable,” said Hackett. “There was a fair amount of inventory recovery in the first half of the year and now that it is built up it will not be repeated in the second half.”

Going forward, the Port Tracker Report is anticipating year-over-year increases in the coming months. June is calling for 1.24 million TEU, a 22 percent annual increase. July is predicted to hit 1.29 million TEU, a 16 percent annual bump. August is calling for 1.26 million TEU, a 9 percent annual gain, and September is projected to hit 1.29 million TEU, a 13 percent gain. And October, traditionally the busiest month of the year, is pegged at 1.24 million TEU, a 4 percent gain, while November 1.13 million TEU would mark a 3 percent bump.

“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,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “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. As retailers head into the peak shipping season, they will also to need to address challenges they are currently facing with lack of vessel capacity and with labor and congestion issues at some of the ports.”