Port Tracker report expects decent gain in imports for first half of 2018

A strong wind is expected to continue blowing on the economic seas in the first half of 2018 but could recede for the full year, based on the most recent edition of the Port Tracker report, which was released late last week 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.

“We’re forecasting significant sales growth this year and that means retailers will have to import more merchandise to meet consumer demand,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “With the benefits of pro-growth tax reform coming on top of solid fundamentals like higher employment and improved confidence, we expect a good year ahead.”

What’s more, the NRF recently issued a forecast calling for 2018 retail sales to be up between 3.8%-to 4.4% annually ahead of the $3.53 trillion recorded in 2017.

For December, the most recent month for which data is available. U.S.-based retail container posts covered in the report handled 1.72 million (Twenty-Foot Equivalent Units). This was 2.1% below November, which the report noted is by when the majority of holiday merchandise is already in the U.S. December was up 8.4% annually, though.

The total import tally for 2017 came in at 20.1 million TEU, which set a new record in topping 2016’s 19.1 million TEU by 7.6%.

Looking ahead, the report expects January to be up 4.1% at 1.77 million TEU, with February up 14.8% at 1.67 million TEU. March and April are estimated at 1.54 million TEU and 1.71 million TEU for a 1.1% decline and 4.8% increase, respectively. And May and June are projected to each hit 1.8 million TEU for respective annual gains of 2.8% and 1.8%, respectively.

Based on these numbers, the report said it is calling for the first half of 2018 to be up 4.9% annually at 10.3 million TEU. That figure is slightly ahead of its estimate for all of 2018, which is expected to be closer to half of 2017’s growth pace and come in around 4%.

“That level of growth is difficult to sustain, however, and our models suggest that 2018 will continue to expand but only at about half that pace despite solid fundamentals that indicate a healthy economy and continued growth in consumer spending,” wrote Hackett Associates Founder Ben Hackett in the report.

In an interview with LM, Hackett added that even with the anticipated decline, the 2018 forecast is still solid.

“Part of the reason is that consumer confidence is not quite where it should be, even though retail sales are still doing OK,” he explained. “There is also the roller coaster ride the stock market has been on as well, which has been a cause for concern. And the unemployment rate at 4.1% is as close to full employment as it has been for years.”

As for the impact of the recently enacted tax law, he said there will likely not be a subsequent surge in retail sales, calling the consumer impact a trickle that will not result in a huge consumer spending uptick, while calling the corporate impact a tidal wave.

Hackett said he is keeping an eye on global PMI (Purchasing Manager Index) readings, which indicate things are slowing down and suggest slower sales are coming through in the U.S. and China, among other nations.