Coronavirus looms large in U.S.-bound retail container volumes, says Port Tracker

The impact of the coronavirus is continuing to impact United States-bound consumer goods originating out of China, according to the most recent 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,
• 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.

Addressing coronavirus, the report observed it is leading to longer New Year factory closures in China, with U.S.-based retail container ports expected to see above normal volume declines in February, which NRF Vice President for Supply Chain and Customs Policy Jonathan Gold noting in the report that February is a historically slow month for imports, due to Lunar New Year, as well as the lull between the holiday season for retailers and the summer months, calling what is currently happening an unusual situation.

“Many Chinese factories have already stayed closed longer than usual, and we don’t know how soon they will reopen,” said Gold. “U.S. retailers were already beginning to shift some sourcing to other countries because of the trade war, but if shutdowns continue, we could see an impact on supply chains.”

U.S. reports covered in the report handled 1.72 million Twenty-Foot Equivalent Units (TEU) in December, the most recent month for which data is available, marking a 1.8% increase over November and a 12.4% decrease against very challenging annual comparisons from December 2018 and ahead of a tariff increase originally slated for December but was postponed. Total 2019 volume came in at 21.6 million TEU, falling 0.8% annually but still representing the second-highest year on record. The highest year on record is 2018, which saw imports reach 21.8 million TEU, which the report attributed to frontloading, or a pull forward, in advance of tariffs that were expected to take effect in 2019.

Looking at 2019, Port Tracker said January was estimated at 1.82 million TEU (a 3.8% annual decrease), with February at 1.41 million TEU (a 12.9% annual decrease), and March is pegged for 1.46 million TEU (9.5% annual decrease). Prior to the coronavirus outbreak, February and March were expected to come in at 1.54 million TEU and 1.7 million TEU, respectively.

“Projecting container volume for the next year has become even more challenging with the outbreak of the coronavirus in China and its spread into the rest of Asia, Europe and North America,” wrote Hackett Associates Founder Ben Hackett in the report. “The tariff war with China had a direct impact on trade in 2019 with U.S. imports declining below their 2018 levels, and further tariff threats against the European Union will not help going forward. Perhaps the Phase 1 agreement with China will alleviate the downward pressure on imports, but as the agreement leaves most of the tariffs imposed over the past two years on the books the impact of the trade war is not yet over.”

Hackett added that as the coronavirus spreads, it will also impact the manufacturing sector and put downward pressure on global trade, with that fear potentially representing the root cause on a global decline in trade growth.