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-July 5, 2007


Global Logistics: Worries about Port Congestion Fade, as Inbound Container Volume Growth Slows Dramatically


All of a Sudden, Double Digit Increases are Gone; Where’s the Volume?


By SCDigest Editorial Staff


The headline news from the most recent Port Tracker survey by the National Retail Federation (NRF) and research firm Global Insights was that it continues to be mostly smooth sailing through US ports in 2007 (See Retail Container Traffic Smooth Despite Possible LA/Long Beach Strike), but what caught our eye is the dramatic slow down in inbound container growth.

For a number of recent years, inbound container volumes were consistently rising 9-14% year over year, and most projections called for continued growth of 9-10% for a long run, as offshoring continued at a breakneck pace.

The latest Port Tracker report, however, shows a different story. While total import volumes are setting records, they are just barely doing so, as growth slows to a trickle.

For example, US ports surveyed handled 1.37 million Twenty-foot Equivalent Units (TEU) of container traffic in May 2007, the most recent month for which actual numbers are available. That was actually down 0.2 percent from May 2006. We haven’t seen declining volumes in quite a long time.

While a record level of volume is expected for this September, at 1.54 million TEUs, breaking the previous record set last October, it represents only a 3.4% increase from last September, way off the levels we had seen until 2007.

What’s causing the dramatically slowing growth? Perhaps a slowing economy, perhaps opportunities for outsourcing easing a bit, as rising wages in China and increasing transportation costs make it less beneficial on the margin to go to offshore. Maybe it’s Wal-Mart’s continued struggles with its apparel business, or the slow down at another big importer, Home Depot.

Regardless, it’s good news for shippers, as congestion should be mild for some time, and pressure on rates from ocean carriers and even rail carriers should moderate (and, in fact, already have for ocean carriers).

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