Impact of COVID-19 remains but less severe, while future growth is unclear, says Port Tracker

By Jeff Berman, Group News Editor · June 8, 2020

While still at very low levels, due to the impact of the COVID-19 pandemic, May volumes at United States-based retail container ports saw some signs of easing, 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 noted in the report that while the most recent batch of volume numbers remain below 2019 levels, they represent an improvement over what was expected a month ago.

“It may still be too soon to say but we’ll take that as a sign that the situation could be slowly starting to improve. Consumers want to get back to shopping, and as more people get back to work, retailers want to be sure their shelves are stocked.”

In a previous edition of the Port Tracker report, Gold said there are various unknowns to fully determine the impact of the coronavirus on the supply chain, 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 April, the most recent month for which data is available, U.S.-based retail container ports handled 1.61 million Twenty-Foot Equivalent Units (TEU), which was off 7.8% annually and up 17% over March, which was at its lowest level in four years, while topping a previous expectation of 1.51 TEU.

The report pegged May to come in at 1.58 million TEU, which would be off 14.6% annually (ahead of a previous forecast of 1.47 million TEU), with June at 1.56 million TEU, for a 12.9% decline (ahead of a previous forecast of 1.46 million TEU). July is estimated to hit 1.62 million TEU, off 17.4% (up from a previous forecast of 1.58 million TEU), and August is projected to reach 1.71 million TEU for a 12.9% annual decline (below the a previous forecast of 1.73 million TEU.

For the six-month period of April through September, imports are expected to be up 3%—or 9.74 million TEU—compared to May’s estimate of 9.46 million TEU. And the report added that the first half of 2020 is expected to hit 9.46 million TEU, which is off 10% annually but an improvement over a previous estimate of 9.15 million TEU. Prior to the onset of COVID-19, Port Tracker estimated the first half of 2020 to come in at 10.47 million TEU.

Despite some indications of slowly improving volumes, or conditions being “less worse,” Hackett Associates Founder pulled no punches in the report, regarding the state of world trade, which he said is in serious trouble.

“And with the arrival of the COVID-19 pandemic, globalization is also under threat,” he wrote in the report. “The old system of trade damaged by the U.S.-China trade war, and the collapse of trade due to national lockdowns has been a body blow compared on top of that. The United States is now faced with Depression-like unemployment of over 40 million people. That, combined with the shutting of factories and retail outlets, has hammered both production and consumption. The inward-looking response by most countries will enfeeble any recovery, leave the worldwide economy vulnerable and spread global instability.”

And Hackett added that the question of how long the downturn will last remains, coupled with it becoming clear that there will not be a V-shaped rapid recovery, due to the challenges in getting 40 million people back to work and many people fearful of catching COVID-19 and staying at home.

As for the pace of the economic recovery, Hackett presented a scenario in which the recovery will be slow and will not really kick in until 2021, with that assuming that there is no strong second cycle of infection.

“We expect a continuing decline in cargo volume in the second half of this year compared with the same period last year, which was already weak,” he wrote. “The forecast U.S. import volume for 2020 (including cargo that reaches the United States via the three Canadian ports we cover) is 22.6 million TEU, which would be an 8.8 percent decrease from 2019. It could end up worse. We may be in this for a long haul, and optimism remains in short supply.”

June 8, 2020