By Jeff Berman, Group News Editor · May 8, 2020
Heavy declines for imports at United States-based retail container ports, due to the ongoing COVID-19 pandemic, are expected to continue in the coming months, according to the new edition of the Port Tracker report, which was issued today 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.
NRF Vice President for Supply Chain and Customs Policy Jonathan Gold observed in the report that even though Chinese factories are back online and United States-based stores that were previously closed and now are reopening, current volume levels remain well below what is traditionally considered normal.
“Shoppers will come back and there is still a need for essential items, but the economic recovery will be gradual and retailers will adjust the amount of merchandise they import to meet demand,” noted Gold.
In the previous edition of the Port Tracker report, Gold said that many stores do still remain closed, and consumer demand has been impacted with millions of Americans out of work, adding that there are still many essential items that are badly needed and because of store closures cargo may sit longer than usual and cause other supply chain impacts.
What’s more, he also explained that various unknowns to fully determine the impact of the coronavirus on the supply chain remain, adding that even as factories in China continue to come back online, with products now flowing again, there are still issues affecting cargo movement, including the availability of truck drivers to move cargo to Chinese ports. And he also noted that retailers are working with both their suppliers and transportation providers to find paths forward to minimize disruption.”
These factors were supported in a separate survey of NRF members, which showed that 40% of respondents indicated they are seeing coronavirus-related issues to the supply chains, with 26% expecting to see disruptions while it continues to be monitored.
Port Tracker found that, for the U.S.-based ports covered in the report, March saw 1.37 million TEU (Twenty-Foot Equivalents) handled, which represents the most recent month for which data is available. This represents the lowest monthly volume going back to the 1.34 million TEU recorded in March 2016, and it is down 9.1% compared to February and down 14.8% annually.
The report pegged April to be down 13.4%, to 1.51 million TEU, with May, at 1.47 million TEU, expected to be off 20.4% compared to May 2019. June and July, at 1.46 million TEU and 1.58 million TEU, are expected to fall 18.6% and 19.3%, respectively. And August and September, at 1.73 million TEU and 1.7 million TEU, are estimated to be down 12% and 9.3%, respectively.
Port Tracker stated that prior to the COVID-19 pandemic, imports from February through May were expected to come in at 6.9 million TEU, but have since been reduced by 14.9%, to 5.87 million TEU. And it added that the first half of 2020 is expected to hit 9.15 million TEU, which would mark a 13% annual decline, down from an initial estimate of 10.47 million TEU.
Hackett Associates Founder Ben Hackett was far from sanguine in his assessment of the report’s data.
“There are few signs of optimism in the shadow of COVID-19,” he wrote. “The International Monetary Fund is projecting a recession of Great Depression levels, with trade declining by 34 percent and unemployment in the United States reaching 15 percent. Most other forecasts are not that pessimistic, but we should nonetheless look at all of them with a pinch of salt. No one has dealt with a ‘viral’ depression before and most projections are being driven by the short-term results of the dramatic lockdown of national economies rather than soundly based on economic fundamentals.”
And he went on to note that much will depend on consumers’ willingness to return to spending, assuming that businesses can be opened quickly enough to soak up the huge levels of unemployed individuals.
“Our view is that second-quarter economic growth will be significantly worse than the previous quarter, but we continue to expect recovery to come in the second half of the year, especially the fourth quarter and into 2021,” he wrote. “This is based on the big and somewhat tenuous assumption that there is no second wave of the virus. Our expectation is that U.S. imports of containerized goods in 2020 will be down by around 10 percent. This is much the same as we had in our April forecast.”
May 8, 2020