Mixed Data Makes for Cloudy Shipping Forecast

WASHINGTON, DC-The most recent Port Tracker produced by IHS Global Insight for the National Retail Federation says the rate of decline in volumes at major US container ports appears to be stabilizing. At the same time, the most recent Cass Freight Index of US shipping reversed several months of gains, falling 4.7% to reach its lowest point since spring. Port Tracker relies on August data from 10 selected ports, while the Cass index is based on transportation dollars and shipments of some 400 Cass client companies throughout the US. The Port Tracker report now predicts volumes will be down only 17% this year rather than the 17.7% predicted last month and 17.9% predicted in the September report. “As we move closer to the end of the year and get updated numbers, we’re seeing a steady improvement, with year-over-year declines becoming smaller,” says Jonathan Gold, the retail federation’s vice president for supply chain and customs policy. “This doesn’t mean that the challenges are behind us, but retailers are slowly starting to import more merchandise and that’s a positive sign.” The report predicts total volumes will reach 12.7 million 20-foot equivalent units (TEUs) this year, compared to 15.2 million TEUs in 2008. Last month’s issue predicted a 12.5 million TEU total. If accurate, the projected total for ’09 would be the lowest in five years. The prediction is based on figures from August at ports in Los Angeles; Long Beach, CA; Oakland, CA; Seattle; Tacoma, WA; Houston; New York/New Jersey; Hampton Roads, VA; Charleston, SC; and Savannah, GA. The total August volume for the 10 ports was 1.17 million TEUs. The August total was up 6% from a month earlier, but it was down 15% from August ’08. “As we come to the end of peak season, very weak monthly import container traffic volume is still the pattern,” says IHS economist Paul Bingham. “Volumes have been increasing month to month, but from a very low trough going back to last winter.” He adds that volumes will likely start to decline on a month-to-month basis once deliveries for the holiday shopping season end. On the other hand, he notes, the report forecasts February could be the first month in more than two years to see a year-over-year increase. The 4.7% decline in the Cass Index from September to October left the index at its lowest point since May. By contrast, in September the index reached its highest point of ’09. Though Cass researchers were hopeful the September peak might have signaled the end of the recession, they now say it may have been caused by a sudden need to restock inventories after letting them dwindle to lower than normal levels. Of the two individual indexes that make up the overall index, Cass reports the shipment index was down 12.3% in October on a year-over-year basis, while the freight index measure of shipper expenditures was down only 2.5% compared to a year ago. The latter index also achieved an ’09 peak in September.