Ports located on both the East and West coasts should prepare for increased activity this fall and early winter season. According to a recently published report from the Port Tracker, the end of 2019 is going to see some higher shipping volumes than the previous year.
The report was issued by the National Retail Federation (NRF) and Hackett Associates (a maritime consultancy firm). It indicates that import volumes at major US ports of retailer containers will not only be higher than last year, but they will be higher than expected and initially forecasted.
While the upcoming round of trade tariffs pending in December are suggested as the leading reason for higher shipping volumes of foreign retail consumer goods, a stronger consumer spending, lower unemployment rates, and a strong US economy are likewise contributing to an onslaught of full-container receiving in the upcoming months.
The ports that were surveyed in the NRF report include Long Beach/LA, Seattle, Oakland, Tacoma, Houston, Charleston, Hampton Roads, New York/New Jersey, Savannah, Jacksonville, Miami, and Port Everglades.
The authors of this report indicated that the importing of retail cargo is not a reflection of retail sales. This is because it is focused on counting the number of containers imported into the country. It also does not represent the value of the commodities in the containers. With that said, the expected higher shipping volumes do represent a reality for port-based warehouses, carriers, and other supply chain businesses to expect and anticipate longer hours, additional staffing, and expedited movements.
US Ports Having a Strong 2019 Already
During the month of August, US-based ports that took part of the survey and reporting handled 1.97-million Twenty-Foot Equivalent Units (TEU’s). This was a 0.2 percent increase over July and 3.9 percent over the YTD. In fact, the receiving volume from August 2019 is slightly less than October 2018’s 2.0 million TEU’s.
The Vice President of Supply Chain and Customs Policy for the NRF Johnathan Gold suggested that a major contributing factor in the rise of the volume is the upcoming December tariffs.
“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.”
Gold continued; “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.”
It’s expected that the 15 percent suggested tariffs on various Chinese imported consumer goods that became active in September will likely expand. If so, this will happen on December 15th to cover nearly $300 Billion of imported goods. Over the past 12 months, a 25 percent tariff has been placed on $250 Billion of imports and peaked at 30 percent on October 15th. While the Trump administration has stated they’ve made ‘huge strides’ in negotiating a deal with China, importers, retailers, and distributors are cautiously optimistic. Many are still hedging their bets with the expected increase in import volume.
The report indicated that volume should peak at 1.9 million TEU during the months of September and increase to 1.93 million in October, 1.97 million in November, and gradually decline to 1.78 million TEU to close out 2019’s import year in December. The December decline is typical, as the majority of retailers have already maintained inventory at fulfillment or distribution centers and forecasting models for retail and e-Commerce operations have improved significantly.
The Founder of Hackett Associates who collaborated with the NFR to conduct this survey Ben Hackett noted in the report;
“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.”
He concluded; “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.”