WASHINGTON: A surge of imports at the Port of Los Angeles and the second-busiest month this year for the Port of Oakland, both in July, bode well for the eastbound trans-Pacific trade experiencing some much-needed growth this peak shipping season.
Laden import containers at the Port of Los Angeles increased 5.15 percent year-over-year in July. Oakland’s imports increased only 1 percent year-over-year, although July was the second-busiest month so far this year at the Northern California port.
“As retailers prepare for consumer needs during the holiday season, we’re encouraged to see import volumes increase,” said Gene Seroka, Port of Los Angeles executive director. However, based on overall conditions so far in the largest U.S. trade lane, and projections by some industry analysts, caution still overrides optimism.
The National Retail Federation, which represents a broad spectrum of merchandise importers, predicts that based on current back-to-school consumer spending and projected holiday sales, 2016 will see total growth in containerized imports of only 1.7 percent from calendar year 2015.
“Shoppers are right in the middle of buying back-to-school products, but the retail supply chain is already preparing for the holiday season,” said Jonathan Gold, NRF vice president for supply chain and Customs policy. The NRF and Hackett Associates each month publish the Global Port Tracker, which tracks merchandise imports at the major container gateways.
The current publication said August will be the busiest month of 2016 for containerized imports, as is usually the case. “August is the peak month of the annual shipping season that builds up to the winter holidays, and a lot of the merchandise consumers will be buying this fall is already showing up at the docks,” Gold said.
The 5.15 percent increase in imports in Los Angeles could be viewed as an indication that the August-to-November peak-shipping season may be more robust than what industry analysts like Global Port Tracker are currently projecting. As the largest container port, Los Angeles sets the trend for U.S. imports, so the transition in July from back-to-school to holiday-season imports is starting off on a positive note.
However, it should also be noted that West Coast ports in 2015 had a disappointing year due to port congestion and labor problems. Therefore, Los Angeles’ performance in July may simply be a return to West Coast ports of market share that was lost during the 2014 and 2015 contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association.
Numbers released Thursday by PIERS, a sister product of JOC.com within IHS Markit, show that in the first six months of 2016, West Coast ports indeed increased market share marginally. East and Gulf Coast ports lost some market share compared to the first six months of 2015. West Coast market share increased to 50.49 percent from 49.84 percent in 2015. East Coast ports’ market share declined to 42.93 percent from 43.18 percent and Gulf Coast ports’ share dropped to 5.77 percent from 6.12 percent in 2015.
What this all portends for the peak-shipping season is still uncertain, and opinions vary as to what level of growth is likely this year. IHS economist Mario Moreno this week revised his projection of growth in containerized imports to 4.5 percent. That is stronger than the 1.7 percent projection of Global Port Tracker, but down from Moreno’s earlier forecast of 7.5 percent growth.
Cargo interests, particularly non-vessel-operating common carriers, report sporadic episodes of cargo rolling this past month in which vessels were overbooked and their shipments were bumped to a subsequent voyage. However, the incidents of rolling were not pervasive and affected NVOs more so than beneficial cargo owners.
At the same time, carriers and carrier alliances have suspended several services in the Pacific in order to mitigate somewhat the significant overcapacity that has plagued the trade all year long. Spot rates for imports from Asia sank to record lows this past winter, and although spot rates have increased in recent weeks, they are still lower than normal for this time of year.
