Volume at major retail container ports is expected to rise

Volume at major retail container ports is expected to rise

US import cargo volume at major retail container ports is expected to rise this month as West Coast ports dig out from a backlog following just-concluded contract negotiations with dockworkers, figures show.

According to the monthly Global Port Tracker report released by the National Retail Federation (NRF) and Hackett Associates, ports handled 1.24m Twenty-Foot Equivalent Units (TEU) in January, down 13.4% from December, and down 9.5% from January 2014.

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

The March number is high, NRF notes, because of the backlog of ships 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 1.51m TEU, up 5.2%; May at 1.57m TEU, up 6.1%; June also at 1.57m TEU, up 6%, and July at 1.6m TEU, up 6.7%.

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

“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,” said NRF Vice president for supply chain and customs policy Jonathan Gold. “Retailers’ immediate priority is to make sure spring merchandise reaches store shelves in time. Going forward, we want labour, 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 Pacific Maritime Association (PMA) and International Longshore & Warehouse Union (ILWU) have been in talks since 12 May on a new coast-wide contract for 20,000 dockworkers at 29 West Coast ports. Retailers and other businesses asked President Obama in December to encourage the use of a federal mediator. A mediator joined the talks in January and a tentative agreement was reached on 20 February.

The congestion prompted many importers to shift their cargo elsewhere, prompting 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%.

“Importers and exporters are reviewing their supply chain plans for the future, and not necessarily in favour of the West Coast,” Hackett Associates founder Ben Hackett said. “Looking on the practical side, a number of factors favour 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 centres by rail. In addition, importers have significant investments in West Coast distribution centres that would not easily be abandoned.

Yesterday, the group representing US apparel and footwear retailers and importers praised efforts to bring the West Coast port labour dispute to an end - but warned the issue is not yet resolved until the new contract is ratified.