US containerized imports are forecast to reach the highest-ever monthly total in August as retailers react to strong consumer demand, providing carriers another tailwind to their improving fortunes.
The Global Port Tracker, published monthly by the National Retail Federation (NRF) and Hackett Associates, predicts August import volume will rise 2.1 percent year over-year, to 1.75 million TEU. The current record for import volume was in March 2015, when inbound containers hit 1.73 million TEU. The forecasted record in August would cap a strong six-month period in which four out of six months will be the busiest months in the history of the report, providing its predictions for the coming months are correct, Global Port Tracker said.
Global Port Tracker forecasts container volume to end the year up 4.9 percent, at 19.7 million TEU, from 2016. IHS Markit Senior Economist Mario Moreno has upgraded his forecast from 6.1 percent annual growth to 6.6 percent after strong volume in the first quarter.
“Retailers are selling more and that means they need to import more,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. “With sales showing year-over-year increases almost every month for a long time now, retail supply chains are working hard to keep up. These latest numbers are a good sign of what retailers expect in terms of consumer demand over the next few months.”
The expected 2.1 percent increase in August over the same month in 2016, followed by a 5.6 percent increase in volume in July — to 1.72 million TEU — over the same month in 2016. June’s volume of 1.69 million TEU was 7.5 percent up from the same month in 2016.
The report predicted the US will import 1.67 TEU in September, an increase of 4.7 percent over the year before, and will import 1.72 million TEU in October, up 3 percent from the same month in 2016. November’s volume is expected to clock in at 1.62 million TEU, down 1.4 percent on the same month in 2016, and December’s volume is predicted to be 1.59 million TEU, up 1.5 percent on the month last year, Global Port Tracker said.
The report’s upbeat predictions match evidence elsewhere suggesting a buoyant peak season, and beyond. The total volume of imports through US ports in the first seven months of the year was 12.5 million TEU, up 1.7 percent on the same period last year, according to PIERS, a sister product of JOC.com.
The Port of Oakland on Wednesday reported an “all-time record” for cargo imports in July, handling 84,835 TEU, a 1 percent increase on the previous record of 84,023 containers handled in March 2015. The Port of Virginia also reported a record, with a “best July ever” total of 234,230 TEU, a 7.5 percent increase over the same month in 2016.
Spot rates in the eastbound Pacific edged lower last week after spiking by double digits last week as carriers attempt to maintain their pricing power during the early stages of the peak-shipping season. The spot rate for shipping a 40-foot container from Shanghai to the East Coast was $2,661, down 1 percent from $2,685 last week. The spot rate to the West Coast was $1,661, down 2 percent from $1,687 per FEU container last week, according to the Shanghai Containerized Freight Index published under the Market Data Hub on JOC.com.
Carriers indeed have greater pricing power this year. Last summer the Pacific trades were marked by overcapacity, which suddenly dissipated when Hanjin Shipping filed for bankruptcy on Aug. 31. Hanjin had accounted for about 7 percent of total capacity in the Pacific. The East Coast rate last week was 41 percent higher and the West Coast rate was 30 percent higher than during the same week last year.
Fewer shippers each year allow peak season surcharges and general rate increases into their annual trans-Pacific service contracts, limiting carriers ability to capitalize on what historically been the most profitable shipping period for them. Even so, Drewry expects container lines to end the year with $5 billion in profit, after six straight years of industry losses.