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Issue #592

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2014 Media Kit

Retailers cautiously optimistic over 2006 logistics challenges

By: | at 07:00 PM | Breakbulk & Projects  

Also applaud repeal of Byrd Amendment

By Peter A. Buxbaum, AJOT

Retailers are casting a wary eye at major ports, wondering whether the coming 2006 peak shipping season will bring major logistics challenges. So far, there is reason for optimism, especially since they came through the record 2005 season relatively unscathed. But a crunch could come if 2005’s prodigious imports growth continues unabated.

Retailers are also celebrating the repeal of the Byrd Amendment, a legislative measure which they say constrained the imports upon which they depend.

‘We see continued challenges to system performance due to continued growth in trade,’ said Paul Bingham, an economist with Global Insight, an economics information and analysis firm. ‘As we must every year, we can expect some shocks to the system.’

The biggest wildcards are the unknown, such as the natural disasters and fuel price spikes that hit in 2005. ‘There will also continue to be rail capacity constraints and trucking concerns,’ he said. ‘We hope the industry will be able to repeat the overall success we saw in 2005 and keep any terminal or network congestion to a minimum.’

The ports tracked by Bingham - Los Angeles/Long Beach, Oakland, Tacoma, and Seattle on the West Coast, and New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast - are currently operating smoothly, with no serious congestion, delays or diversion of cargo anticipated. For railroads serving ports, the few lingering hurricane impacts on the national rail system are being cleared. Despite continued high diesel fuel prices, port trucking is operating smoothly.

Of course, shipping levels at this time of the year are at their lowest. But Bingham’s current six-month outlook, which covers the beginning of the 2006 peak shipping season, calls for slower growth at West Coast ports than during the same months in 2005. ‘Market share gains that were seen in Oakland, Seattle, and Tacoma are not likely to continue at the same pace,’ he said. That is good news for East Coast ports, which Bingham expects will not lose Asian cargo back to West Coast ports, and good for retailers, who can expect the continued the spreading of Asian imports to a greater number of ports, thereby mitigating congestion.

Bingham deemed the 2005 peak season ‘record-setting’ and ‘successful.’ ‘Despite natural disasters, increased fuel prices and continued rail capacity restraints, there was no repeat of the congestion we saw in 2004,’ he noted. ‘The railroads got through with few substantial delays and little congestion despite strained network and terminal capacity. Some shippers experienced intermodal rail delays but the industry performed much better than,’ the 2004 peak season.

‘There were certainly some threats from Hurricane Katrina and the storm’s effect on railroad capacity,’ added Erik Autor, vice president and international trade counsel at the National Retail Federation. ‘But the ports themselves didn’t see the problems we’ve seen in the past.’ The National Retail Federation is a Washington-based industry umbrella group.

The biggest predictable challenge for 2006 will be the continued growth in imports. Year-over-year monthly figures supplied by Global Insight for the 2005 peak shipping season show that container traffic increased in August by 11%, in September by 14.5%, in October by 7.9%, in November by 3.8%, in December by 4.8%. A six-month forecast indicates that February 2006 traffic to be up slightly from a year ago, and that June 2006 will see a 10.7% increase in containers from June 2005.

Byrd Amendment repeal a, ‘Major victory’

On the legislative front, the National Retail Federation welcomed final passage of legislation to repeal the Continued Dumping and Subsidy Offset Act (CDSOA), also known as the Byrd Amendment. ‘This is a major victory for retailers, consumers and common sense,’ said Autor. ‘By encouraging the abuse of antidumping laws, the Byrd Amendment has driven up prices of consumer products while achieving no purpose othe