Container Volume Jumps

Thursday Mar 12, 2015

Container volume jumps as ports work through backlogs

Projected to rise nearly 17% after earlier declines

Powell Slaughter -- Furniture Today, March 12, 2015

WASHINGTON — Import container volume at the nation’s major ports this month should rise an unusually high 16.9% over March 2014 as West Coast ports dig out from a backlog of cargo that built up during contract negotiations with dockworkers, according to a new report.

The congestion also caused significant shifts by importers in where they are landing containers, and a led to considerable drop in container traffic the first part of the year.

That’s according to the latest Global Port Tracker report released Monday by the National Retail Federation and Hackett Associates.

“The contract talks are over, but the tentative agreement still has to be ratified and it’s going to take months to get back to normal on the West Coast,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “Retailers’ immediate priority is to make sure spring merchandise reaches store shelves in time. Going forward, we want labor, management and Washington to work together to see that we never again have a situation like what we went through these past several months.”

The old contract between the Pacific Maritime Assn. and the International Longshore and Warehouse Union had expired on July 1. Months later, the lack of a contract and other operational issues had led to crisis-level congestion at the ports. A federal mediator joined the talks in January, but a tentative agreement was not reached until Feb. 20, after Labor Secretary Tom Perez sat down to personally broker a deal.

Ports covered by Global Port Tracker handled 1.24 million 20-foot equivalent units in January, the latest month for which after-the-fact numbers are available. That was down 13.4% from December following the end of the holiday season and down 9.5% from January 2014.

February was estimated at 1.27 million TEU, up 2.3% from 2014. March is forecast at 1.52 million TEU as spring merchandise arrives, up 16.9% from last year.

Minneapolis-based import/export data source Zepol also reported declines in total U.S. container imports in the first two months of this year, down more than 5% this year from January and February of 2014. It said volume through the ports of Los Angeles and Long Beach, which make up a combined 40% of U.S. container imports, declined by 19% and 20%, respectively, so far in 2015.

NRF said March number is high both because of the backlog of ships at anchor waiting to be unloaded and because the annual Lunar New Year shutdown of Chinese factories was later this year, delaying some February cargo into March. April is forecast at 1.51 million TEU, up 5.2%; May at 1.57 million TEU, up 6.1%; June also at 1.57 million TEU, up 6%, and July at 1.6 million TEU, up 6.7%.

The first half of 2015 is forecast at 8.7 million TEU, an increase of 4.5% over the same period last year.

Congestion at West Coast ports has prompted many importers to shift their cargo elsewhere, creating speculation on how long the shift might last. West Coast ports handled 55% of cargo this January, down from 64% during the same month in 2014, while East Coast ports handled 45%, up from 36%, according to Port Tracker.

Zepol’s numbers also indicate that East Coast ports have benefited from the West Coast congestion, especially the port of New York/Newark, which Zepol said has increased container imports by 8% this year.

“Importers and exporters are reviewing their supply chain plans for the future, and not necessarily in favor of the West Coast,” Hackett Associates founder Ben Hackett said. “Looking on the practical side, a number of factors favor a return to the West Coast.”

Hackett said sending ships from Asia to the East Coast is more expensive than the West Coast, takes longer, and results in higher expenses to move the cargo to Midwest distribution centers by rail. In addition, importers have significant investments in West Coast distribution centers that would not easily be abandoned.

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