Cargo volumes at U.S. ports are expected to grow at a slower rate in 2016, according to a new report from Moody’s Investors Service.
Container cargo volumes at U.S. ports will grow at a slower rate in 2016 as export demand is expected to remain relatively weak and retailers continue to work through an inventory backlog, according to a new report by Moody’s Investors Service.
The report projected a 3 percent to 4 percent increase in box traffic in 2016, down from a 5 percent growth rate this year.
Moody’s noted cargo growth in 2015 was somewhat inflated by a massive surge in container imports following the conclusion of contentious labor contract negotiations between West Coast port workers and their employers. Negotiations between the International Longshore and Warehouse Union and Pacific Maritime Association lasted nearly a year, during which ports in California and the Pacific Northwest experienced massive vessel backlogs that had ripple effects throughout supply chains nationwide.
“The growth this year was inflated by the port gridlock and then the unwinding of that, which has really driven up inventories in the U.S.,” said Moses Kopmar, author of the report.
Excess inventories that resulted from the clearing of West Coast port congestion have also been blamed for the lack of traditional peak shipping volumes leading up to the holiday shopping season. The latest Global Port Tracker report by the National Retail Federation and Hackett Associates, however, has projected a 7.4 percent year-over-year increase in November volumes at the ports covered by the report.
Should the NRF’s projections for the remainder of the year hold true, the dozen major U.S. retail ports covered by Global Port Tracker will have handled a total of 18.3 million TEUs, up 5.5 percent from 2014.
The Moody’s report also noted cargo volumes in the U.S. will continue to suffer from the current economic recession in China.
“The ongoing gradual slowdown in China, which is a major participant in global trade and represents 30% of all container moves, continues to weaken demand across cargo markets,” it said.
On the flip side, Kopmar said volumes should get a lift from labor stability at West Coast ports, and low oil prices and persistent overcapacity continuing to suppress ocean freight rates.
For 2016, Moody’s outlook for the shipping industry is “stable,” and in the longer-term, “our expectation is that container growth is going to grow relatively in line with GDP,” said Kopmar.
Report: U.S. port growth expected to slow in 2016
