Port Tracker volume outlook is solid amid economic growth and threat of tariffs

Steady summer growth for United States-bound retail container shipments appears to be in the cards, even though the possibilities of steep tariffs being placed on imported goods from China remains a distinct possibility, according to the most recent edition of the Port Tracker report issued 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.

“With proposed tariffs yet to be officially imposed, retailers are stocking up on merchandise that could soon cost considerably more,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement. “If tariffs do take effect, there’s no quick or easy way to switch where these products come from. American families will simply be stuck paying higher prices and hundreds of thousands of U.S. jobs could be lost.”

For March, the most recent month for which data is available, U.S.-based retail container ports, U.S.-based retail container ports came in at 1.54 million TEU (Twenty-Foot Equivalent Units), which is down 8.6% compared to February due to fluctuations related to the Lunar New Year factory shutdowns in Asia, with the annual difference being a 0.7% decrease.    

Port Tracker pegged April at 1.73 million TEU for a 6.4% annual gain, and May was estimated to hit 1.82 million TEU for a 4.3% annual gain. June was also expected to hit 1.82 million TEU for a 6.1% annual increase. The summer months of July and August, as of now, are being forecasted to see gains of 5.5% at 1.9 million TEU and 4.6% at 1.92 million TEU, respectively, which would each set new records for containers imported in a single month, topping the 1.83 million TEU recorded in August 2017.

For the first half of 2018, Port Tracker expects total volume to be up 10.4% annually at 5.8%.

“Perhaps the world has realized that it is mostly talk-at least so far-coming out of Washington (as it relates to the impact on global trade),” Hackett Associates Founder Ben Hackett wrote in the report. “The declared tariffs that were to be imposed on steel, aluminum and Chinese goods are yet to become a reality.”

As for China, Hackett explained that the global power is now planning and vetting non-U.S. resources for bulk commodities like coal, sorghum, and soybeans, as U.S. farmers are feeling the impact of both sorghum, and soybeans. What’s more, he observed the the U.S. dollar is gaining in value, which increases export values and could be the reason as to why the balance of trade saw gains last month.

“Despite the threats and risks to trade, we continue to see solid expansion and our models are projecting this to continue throughout the year, although at a slower pace than last year,” Hackett wrote. “The main reason is that the consumer is spending more than his net personal income and is also drawing down on savings. This is driven by a strong level of confidence as the economy remains strong and unemployment is at its lowest level in nearly two decades. Growth seems to be spread evenly across the country. Europe, while experiencing the best growth for years, does show signs of impending economic weakness.”

In an interview with LM, Hackett explained that he believes that a fair amount of import growth may be due to stockbuilding in case of tariffs as a number of economic indicators are suggesting a slowdown.

“The key risk these days is the anti-Iran agreement policy and the continued effort by the Trump Administration to withdraw from the global stage,” he said.  “Pax Americana appears to be waning as a result.”