According to Port Tracker, published by the DC-based National Retail Federation and Waltham, MA-based economic forecasting firm Global Insight, cargo volume at North America's major retail container ports is now expected to decline 6.5% in 2008, as merchants carefully manage inventories in response to the slow economy. Volume is projected to total 15.43 million 20-Foot-Equivalent Units (TEUs) for the year, compared with 16.5 million TEUs in '07. The estimate is down from 15.5 million TEUs projected in September. The total would be the lowest since '05, when 15.4 million TEUs moved through the continent's ports.
The report says container imports for August, the most recent month for which data is available, were up compared to July but down 5.9% compared to a year ago. It projects an even bigger drop of 9.2% for September compared to September '07, followed by respective declines of 4.3% for October, 6.9% for November, 2.1% for December, 1.6% for January and 5.9% for February.
"This has clearly been a difficult year and we still have a challenging holiday season ahead of us," says Jonathan Gold, NRF vice president for supply chain and customs policy. "Retailers are being careful to import only as much merchandise as they think they can sell."
If there's a silver lining in the otherwise dismal report, it's that lower cargo volumes mean less port congestion and fewer rail and trucking capacity constraints. Port Tracker ranks all North American ports but Los Angeles-Long Beach as "low" for congestion over the next six months. Significantly, the Southern California port complex is rated "medium" for congestion not because of higher imports but because of uncertainties surrounding the ports' clean-trucks program that took effect Oct. 1.
The decline is not confined to North America. According to the Annual Container Market Review and Forecast 2008/2009 from London-based Drewry, every country and region of critical importance to the container industry has suffered a major loss of confidence. "There is no doubting the seriousness of this for the container industry and the tone of this annual report is indeed gloomy," says report editor Neil Dekker. "The super-cycle of 2002-2007 is now well and truly over."
Drewry says declines in the container industry have been made worse by a spate of new ship orders. Some 65 new ships in excess of 8,000 TEUs will launch in the next two years. The report predicts the anticipated excess in capacity will further depress shipping rates, which have already fallen due to the slow-down in trade. On the other hand, the report points out, reduced freight prices could lead toincreased production, and consequently increased shipping, as retailers and manufacturers recognize an opportunity to bring products to market at lower prices.
Dekker says no nation is immune to the downturn. Even though some regions may still enjoy strong fundamentals, the economic turmoil in the US and Europe is creating so much unease that shipping and container companies throughout the world are pulling back, at least temporarily. Nonetheless, he adds the report does mention some positives, including strong growth on routes from Asia to the Mideast ,India, West Africa and the east coast of South America, as well as US exports to north Europe, the Mediterranean and Asia, which has reduced the uneconomic practice of sending empty containers back to their point of origin.
The decline is also not limited to ocean shipping. According to Airports Council International in Geneva, Switzerland, domestic air freight continued to fall in August, dropping 19%. The drop was driven primarily mainly by North America and Africa, which saw shifts of -27% and -28%, respectively. International freight shrunk by a smaller 2.6%, led by North America at -8% and the Asia Pacific region at -4.3%.
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