Tariff issues aside, Port Tracker report expects record-level summer volumes

As was the case in its previous edition, the Port Tracker report issued today by the National Retail Federation (NRF) and maritime consultancy Hackett Associates expects United States-bound retail container shipments to set a new record in July. Two of the drivers for the expected gains, according to the report, are increasing consumer demand and retail sales gains.

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.

“Retailers cannot easily or quickly change their global supply chains, so imports from China and elsewhere are expected to continue to grow for the foreseeable future,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “As tariffs begin to hit imported consumer goods or the parts and equipment needed to produce U.S. goods, these hidden taxes will mean higher prices for Americans rather than significant changes to international trade.”

For May, the most recent month for which data is available, Port Tracker reported that U.S.-based retail container ports hit 1.82 million TEU (Twenty-Foot Equivalent Units), which was 11.6% ahead of April, which coincides with the beginning of summer merchandise coming into U.S. ports.

And it added that June is pegged at 1.83 million TEU for a 6.8% annual gain, with July pegged at 1.87 million TEU for a 3.8% annual uptick. August and September are expected to hit 1.91 million TEU and 1.82 million TEU, respectively, for annual gains of 4.2% and 2.1%. October is estimated to be up 5.3% annually at 1.89 million TEU.

As for the anticipated records, the report explained that June’s projected 1.82 million TEU would tie August 2017 as the highest-volume TEU month, which was set in August 2017, with July’s estimated 1.87 million TEU topping that and August’s estimated 1.91 million TEU poised to set another record.

What’s more, the report said that the first half of 2018, which is expected to hit 10.3 million TEU, would mark a 4.9% annual gain.

“July 6 was the official beginning of the United States’ trade war with China and the European Union,” wrote Hackett Associates Founder Ben Hackett in the report. “Will it make a difference to international trade and cargo volume? Globally, not all that much, but for the United States there will certainly be an impact. What started as the imposition of tariffs on steel and aluminum has turned into a broader tit-for-tat with responses from China and the EU and threats of counter responses from President Trump. And so start the trade wars as threats of counter measures by both sides abound. There will be no winners, only losers – particularly consumers – as costs increase, either directly on end products or on the inputs needed for the production of goods. The biggest losers in the U.S. will be the agricultural sector as it is an easy target.”

Hackett added that the immediate impact on US import trade has been an increase in volumes as May saw a surge in container cargo, which he said is most likely a bid to build up inventory ahead of the tariffs.

“Consumer demand remains solid with no decline, but we can expect to see the trade war eventually impacting future retail sales,” he said. “The biggest impact will be on the West Coast, where China trade dominates…The combination of the trade war and higher tariffs can only result in a reduction of trade to and from the U.S.”