Port Tracker report points to higher volumes ahead of pending tariffs

In advance of another round of tariffs set to take effect in December, the most recent edition of the Port Tracker report, which was issued today by the National Retail Federation (NRF) and maritime consultancy Hackett Associates, expects import volumes at major United States-based retail container ports to hit its highest mark for 2019.

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.

NRF Vice President for Supply Chain and Customs Policy Jonathan Gold pulled no punches in explaining the expected impact of the coming round of tariffs, in terms of the potential impact it stands to have in U.S. business and consumers alike.

“This is the last chance to bring merchandise into the country before virtually everything the United States imports from China comes under tariffs,” Gold said in a statement. “Retailers are doing all they can to mitigate the impact of tariffs on their customers. The effect on prices will vary by retailer and product during the holiday season, but ultimately these taxes on America businesses and consumers will result in higher prices. We urge the administration to use this week’s talks with China to make progress toward ending the trade war and return to policies that promote long-term economic growth and prosperity for American families.”

The report noted that a new round of tariffs, at 15%, on various consumer goods imported from China took effect in early September and are positioned to expand to other goods on December 15, which will cover roughly $300 billion in imports. What’s more, these tariffs come on top of 25% tariffs on $250 billion in imports that have taken effect over the last 12 months and are set to head up to 30%, effective October 15.

U.S. ports covered in the report handled 1.97 million Twenty-Foot Equivalent Units (TEU) in August, the most recent month for which data is available, marking a 0.2% increase over July and a 3.9% annual gain.  The report said that this output marks the second-highest number of containers imported over the last year, second only to October 2018’s 2 million TEU.

Port Tracker said that September is pegged to hit 1.9 million TEU (a 1.6% annual increase), with October projected to come in at 1.93 million TEU for a 5.1% annual decline, and November estimated to hit 1.97 million TEU for an 8.9% increase and match August for the second best volume month for the last year. Things are expected to trend down in December, with a 9.3% decrease to 1.78 million TEU. Port Tracker said this anticipated decline is attributed to additional tariffs taking effect in December, coupled with the fact that December import levels typically see a decline, as the majority of holiday goods have already arrived into U.S. ports.

According to the report, with imports expected to see annual declines for most of the remainder of 2019, the reason for that is largely due to difficult annual comparisons, stemming from high 2018 volumes.

And it added that the first half of 2019 hit 10.5 million TEU for a 2.1% annual increase, with full-year 2019 volumes positioned to set a new record at 22 million, which would represent a 1.2% annual gain over 2018’s 21.8 million TEU.

Hackett Associates Founder Ben Hackett wrote in the report that the tariff and sanction wars are beginning to take a bite out of the world economy, with the latter having become what he termed a weaponized tool to replace military ones.

“Let there be no doubt, U.S. trade policies and enforcement mechanisms have directly caused a global slowdown in economic growth as well as a decline in trade growth,” Hackett wrote. “Germany is on the brink of a recession as are Italy and the United Kingdom. A hard Brexit should it happen, and that now looks likely, will push the European Union into a slump. The partial answer to the conundrum is that the strength of retail consumption will push any meaningful slowdown in imports into next year, when the full impact of the tariff wars will be translated into a consumption tax felt by consumers.”