Container Volumes Could Drop By 6%

Cargo volume at US retail container ports could be off by 6% in 2008, according to the monthly Port Tracker report.

Released by the National Retail Federation and Global Insight, the report suggests the slow economy has prompted merchants to manage inventories very carefully. The 6% drop is represented by a projected annual total of 15.5 million twenty-foot-equivalent units (TEUs), down from the August forecast of 15.8 million TEUs. This compares with 16.5 million TEUs in 2007.

Cargo volume each month of 2008 has been below the same period in 2007 and this trend was expected to continue through the end of 2008. Increases expected for October and December are no longer anticipated.

“Retailers are tightening up their inventories to reflect what they expect to be able to sell during the holiday season,” said Jonathan Gold, vice president for Supply Chain and Customs Policy with the National Retail Federation (NRF). “We still expect to see an increase in sales this year, but the economy is clearly challenging and our industry is trying to hit the balance point between supply and demand as closely as they can.”

In July, the latest month with complete data, US ports surveyed showed a 2.6% increase in volumes over June, but an 8.3% drop from July 2007.

New regulations at the Ports of Los Angeles and Long Beach (See: LA Port Truck Plan Passes Another Hurdle) that would require the use of company drivers have led the NRF and Global Insight to raise the congestion rating for the ports. “Uncertainty about the initial implementation of the Clean Trucks Program raises concerns about potential truck capacity for these ports,” said Paul Bingham, economist, Global Insight. “There is some risk for port performance associated with this program, but the ports say they have received letters of intent from several trucking companies and say they believe operations can go forward without interruption.”

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