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Retail container traffic building, but still below last year’s level, says new report

WASHINGTON, DC – 04/08/08 – Container traffic at the nation’s major retail container ports is starting to build back up again after its traditional winter lull, but will still show weak increases or fall below last year’s levels over the next several months, according to the monthly Port Tracker report released recently by the National Retail Federation and Global Insight.

Negotiations on a new contract between the ILWU (International Longshore & Warehouse Union) and the Pacific Maritime Association (PMA) began in March, but the 2002 labor dispute that closed 39 US West Coast ports from Tacoma to San Diego for ten days shouldn’t be repeated when the current contract expires this summer, according to Global Insight economist Paul Bingham, one of the authors of the report.

The current ILWU contract negotiated in 2002 is set to expire July 1.

“Monthly port volumes are building slowly following the slow season but import container traffic is forecast to be quite weak through August due to the underlying weakness in demand in the US economy,” Bingham said, adding that the covered ports “are operating without congestion from the harbor to the gate, with late-winter weather problems resolved.”

The 2002 port strike/lockout had “a rippling effects for several months afterward,” he said. “Without a backup plan, many importers and exporters experienced marooned cargo and the situation proved costly, especially for those moving time-sensitive or perishable goods.”

According to Jonathan Gold, vice president for supply chain and customs policy at the Washington, DC-based National Retail Federation (NRF), despite those issues, professionals who follow West Coast labor relations “believe things will not be so bad this time around.”

The current labor negotiations, he said, “have begun earlier than usual and with the Panama Canal being expanded, more ships using the Suez Canal and East Coast ports being expanded, both labor and management realize this year that the dominance of West Coast ports is not guaranteed.”

Contentious labor negotiations, said Gold, “would hasten the move to the East Coast and would prove costly for those on both sides of the negotiating table.''

Terminal operators, "don’t want to lose volume, and union negotiators don’t want to lose the jobs that go with that volume. This should provide a strong incentive for both sides to conclude a new contract before July," he concluded.

The US ports surveyed for the report handled 1.24 million TEUs (Twenty-Foot-Equivalent Units) of container traffic in February, the latest month for which actual numbers are available and traditionally the slowest month of the year.

The number was unchanged from January but down 5.4% from February 2007 to make it the seventh month in a row to show a year-to-year decline.

March was estimated at 1.29 million TEU, up 1.1% from March 2007, an increase that would break the string of year-to-year decreases if the figures hold true when actual numbers come in.

The April is forecast at 1.34 million TEU, up 1.7% from April 2007, while May is forecast at 1.36 million TEU, down 1% from May 2007, June at 1.38 million TEU, down 4.9% from the same month last year.

The July forecast stands at 1.43 million TEU, down 1% from July 2007 and August is forecast at 1.46 million TEU, the same as last year.

All US ports covered by Port Tracker – Los Angeles, Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston, and Savannah on the East Coast, and Houston on the Gulf Coast – are rated “low” for congestion, the same as last month.

Port Tracker, which is produced by the economic research, forecasting and analysis firm Global Insight for the NRF, looks at inbound container volume, the availability of trucks and railroad cars to move cargo out of the ports, labor conditions and other factors that affect cargo movement and congestion.

The National Retail Federation is the largest retail trade association in the world with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores, and grocery stores.

The organization represents an industry with more than 1.6 million US retail establishments and 2006 sales of $4.7 trillion. As an industry umbrella group, the NRF also represents more than 100 state, national and international retail associations.

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