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Retail Imports Set Records Despite West Coast Port Drama

By MarEx 2014-11-11 10:47:00

Import cargo volume at the nation’s major retail container ports is expected to slow down this month following record levels seen in September and October as retailers rushed to bring merchandise into the country ahead of a possible shutdown of West Coast ports, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates.

“Retailers have done all they can to stock their shelves and build up inventories in case the worst should happen,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “We believe it’s time for President Obama to send in a federal mediator and do what it takes to reach an agreement that will work to the benefit of not just labor and management but all the businesses and consumers who depend on these ports.”

Import volume at U.S. ports covered by the Global Port Tracker report is expected to total 1.4 million containers this month, down from 1.59 million each in September and October, a number that broke the previous monthly high of 1.52 million set in August. Cargo volume has been well above average each month since spring as retailers have imported merchandise early in case of any disruption on the docks.

The contract between the Pacific Maritime Association and the International Longshore and Warehouse Union expired on July 1, prompting concerns about potential disruptions that could affect holiday merchandise. The lack of a contract and other operational issues have led to crisis-level congestion at the ports in recent weeks, prompting concern of a shutdown.

Over the past couple weeks, the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) have been passing blame for the congestion problem that is plaguing the major West Coast ports. The PMA has accused the ILWU of threatening to stem the flow of cargo during the final holiday season push, bringing “the port complex to the brink of gridlock.” 

The ILWU fought back using documented causes of congestion at the ports including: chassis shortage and dislocation; record retail import volumes (increases of 5.3 percent over 2013); larger vessels discharging massive amounts of cargo; container terminals pushed to storage capacities; and the peak shipping season (i.e., the August through October pre-holiday surge).

Adding to this, on September 23, 2014, the Port of Los Angeles experienced its largest fire in decades, forcing the evacuation of 850 workers and resulting in the temporary closing of three of six cargo terminals, causing delays in the movement of cargo that reverberated down the supply chain. The congestion problem is so acute that the Port of Long Beach recently convened “a high-level Congestion Relief Team to meet daily, seek solutions, and solicit feedback.”

The 1.59 million Twenty-Foot Equivalent Units handled in September, the latest month for which after-the-fact numbers are available, was up 5.2 percent from August and 10.9 percent from September 2013. One TEU is one 20-foot cargo container or its equivalent.

October was estimated at 1.59 million TEU, within about 3,000 containers of September’s level and up 11 percent from the same month last year. November’s forecast of 1.4 million TEU would be up 3.9 percent from last year, and December is forecast at 1.36 million TEU, up 3.3 percent.

Those numbers would bring 2014 to a total of 17.3 million TEU, an increase of 6.4 percent over 2013’s 16.2 million. Imports in 2012 totaled 15.8 million. The first half of 2014 totaled 8.3 million TEU, up 7 percent over last year.

January 2015 is forecast at 1.42 million TEU, up 3.1 percent from January 2014, February at 1.35 million TEU, up 8.4 percent from last year, and March at 1.33 million TEU, up 2.3 percent.

The import numbers come as NRF is forecasting 4.1 percent holiday season sales growth and 3.6 percent growth for 2014 overall. Cargo volume does not correlate directly with sales but is a barometer of retailers’ expectations.

“September was a bumper crop well above even our own expectations,” Hackett Associates Founder Ben Hackett said. “Despite all the delays, vessels do continue to berth and discharge their cargo.”