Port Tracker report shows gains in imports but not without concerns

A combination of previously planned tariff hikes remaining in a holding pattern and the pending summer season coming equals an expected gain in United States retail container volumes according to the Port Tracker report, which was released 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.

“Retailers are starting to stock up in anticipation of a strong summer,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “Tariff increases are on hold and progress is being reported in talks between the United States and China, so the imports we’re seeing now are driven primarily by expectations for consumer demand.”

U.S. ports covered by Global Port Tracker handled 1.62 million Twenty-Foot Equivalent Units (TEU) in February, the latest month for which after-the-fact numbers are available. This marked a 14.3% decline compared to January and a 14.3% annual decline. February is traditionally the slowest month of the year because of Lunar New Year factory shutdowns in Asia and the lull between retailers’ holiday and summer seasons. A TEU is one 20-foot-long cargo container or its equivalent.

March is pegged at 1.63 million (a 5.9% annual increase), April is forecasted at 1.75 million TEU (a 6.9% annual gain), and May is expected to hit 1.9 million TEU for a 4% increase. June, July, and August at 1.89 million TEU, 1.96 million TEU, and 1.97 million TEU are expected to rise 2%, 2.9%, and 4.3%, respectively. The report noted that if the August number meets expectations it would represent the highest tally going back to October 2018, when it hit 2 million TEU and set a new record, as retailers were importing holiday merchandise in advance of tariff increases that were expected.

Imports during 2018 set a new record of 21.8 million TEU, an increase of 6.2 percent over 2017’s previous record of 20.5 million TEU. The first half of 2019 is expected to total 10.7 million TEU, up 3.7 percent over the first half of 2018.

In an editorial, Hackett Associates Founder Ben Hackett wrote that while growth remains intact for the U.S. ports covered in the report, the global outlook is less encouraging.

Hackett noted that the World Trade Organization recently issued a 3% estimate for global trade growth for 2018, which is nearly a full percentage point down from a 3.9% estimate issued in September 2018, with 2018 expected to come in at 2.6%. He pointed to weaker economic growth at the main reason, coupled with Brexit and U.S.-inspired trade wars as well.

Other reasons for concern identified by Hackett included slowdowns in various parts of the world like Italy, which is in a recession, China, whose economy has slowed dramatically, and a decline in German manufacturing output.  And he also noted concerns about U.S. slowing for industrial production, manufacturing output, and investment, which could lead to a projected 2019 GDP reading of 2.4, down from 2018’s 2.9.

“The economic slowdown this time is not linked to financial institutions but rather to the manufacturing sector’s reduced output as trading partners are buying less,” wrote Hackett. “The US consumer, while more cautious, has not stopped spending. The inventory-to-sales ratio is, however, on the rise. On the positive side, we do not project a recession for 2019, just a slowdown in growth.  This is mirrored in our models for US consumer goods imports, with a 2.3 percent increase in containerized imports for 2019, down from 2.7 percent in our previous projection. Part of this can be attributed to the heavy front-loading of imports ahead of expected tariff increases in 2018.”