–Retransmitting Realty Check, Correcting to ‘Rose’ in 21st Paragraph
–Holiday Demand Stronger Than Expected
–Imports Set to Rebound as Retailers Rebuild Inventories
–Exports Hurt by Euro Turmoil, Asia Slowdown

By Jon Hurdle

PHILADELPHIA (MNI) – Import volumes at major U.S. ports declined or
showed little growth in October as retailers took a cautious approach to
traditional pre-Christmas inventory building of consumer goods in
anticipation of a lackluster holiday shopping season, analysts and port
officials said.

But early reports suggest consumer demand has been stronger than
expected, leaving some retailers with the prospect of depleted shelves
as Christmas approaches, and the need to restock shelves early in the
New Year.

Data from leading ports show containerized imports dropped in the
month, continuing the pattern of August and September when inbound flows
normally surge but failed to do so this year.

Strong sales reports over the Thanksgiving weekend suggest import
volumes will rebound in December and January as retailers rebuild
inventories that are being depleted in the holiday shopping rush.

“In 2010, we saw an early surge but in 2011 it didn’t happen,” said
Daniel Hackett of Hackett Associates, a consultant that compiles the
monthly Port Tracker report on imports through major U.S. ports in
cooperation with the National Retail Federation.

“Inventory levels were allowed to decline substantially. It looks
like the very strong sales figures could result in inventory
restocking,” Hackett said.

The NRF said a record 226 million shoppers visited stores and
retail web sites over the Black Friday weekend, up from 212 million in
2010, spending an average of $398.92 – up from $365.34 – for a total of
$52.4 billion.

Ahead of the U.S. Commerce Department’s release of October trade
data on Dec. 9, the leading West Coast ports of Long Beach, Los Angeles
and Oakland all reported monthly or year-over-year declines in
containerized import volumes.

The number of twenty-foot-equivalent containers (TEUs) arriving at
Long Beach totaled 240,248 in October, 8.7 percent below September’s
level and 20.8 percent lower than a year earlier.

Combined import and export volumes at Long Beach declined by 20.5
percent in October compared with a year earlier but the numbers were
distorted by the loss of a major client because of a dispute over the
development of a new terminal at the port, said Sean Strawbridge,
Managing Director of Trade Development and Port Operations.

Adjusting for the loss of that client – which moved to the Port of
Los Angeles — the overall decline in volume was about 10 percent,
Strawbridge said.

Import volumes at Long Beach and other ports were hit this year by
retailers deciding to ship more goods by air and sell limited volumes at
full price rather than discounting to clear unsold inventory,
Strawbridge said.

One major retailer increased its airborne orders to 40 percent from
30 percent, cutting its ocean-shipped goods by the same margin to 60
percent, he said.

“Retailers were much more competitive about how they managed
inventories,” he said.

Retailers soft-pedaled holiday orders this year because their
confidence was hit by stock-market turmoil, the U.S. debt downgrade, and
the European debt crisis during July-September when they have to place
orders for the economically crucial holiday season.

Retailers are now expected to replenish inventories, a process
that’s likely to boost import volumes for ports like Long Beach in early
2012, Strawbridge said.

For the first 10 months of 2011, containerized import volumes at
the port were 2.0 percent lower than a year earlier.

On the export side, volume slipped 6 percent from a year ago after
adjustment for the client’s loss, Strawbridge said. The underlying
decline has been driven by flagging demand for U.S. exports such as
farm products, recyclables and thermal coal used for steelmaking as
Asian economies slow, and global growth forecasts edge down, he said.

At the Port of Oakland, imported TEUs fell 6.2 percent on the month
and 3.1 percent from a year earlier, while Los Angeles, the biggest U.S.
container port, reported a 1 percent monthly decline although imports
were 5.5 percent higher than a year earlier.

On the East Coast, October’s containerized imports at the Port of
Savannah, Georgia fell 4.4 percent on the month and 9.2 percent on the
year, while Baltimore’s volumes declined by 12.2 percent on the month
and 9.6 percent compared with a year earlier.

At Jaxport, part of the Port of Jacksonville, Fla., imports dropped
10 percent from September but were 2 percent higher than in October
2010.

The October import data are further evidence that retailers
expected modest holiday sales this year amid widespread economic
uncertainty, said Paul Bingham, a shipping economist at Wilbur Smith
Associates, a transportation infrastructure consulting firm in Columbia,
S.C.

“The weakness in October was more important than the weakness in
September,” Bingham said. “October is traditionally the peak month, when
it’s got to happen,” he said, referring to annual pre-holiday surge in
imports.

Given the strong recent sales reports, it looks like some retailers
did not anticipate the strength of early-season shopping and they may
now face insufficient inventories to see them through until Christmas,
Bingham said.

But there are also signs that some households have already spent
their holiday budgets in response to retailers’ heavy hype and
promotions, Bingham said. If so, demand could fizzle as Christmas
approaches.

Also contributing to lower imports were intermediate goods used for
a variety of manufactured products, and lumber, furniture, or anything
else related to the U.S. construction industry which is still depressed,
he said.

On the export side, October volumes showed patchy growth,
suggesting that demand for U.S. goods is being hurt by the ongoing
European debt crisis and slowing growth in Asia.

Containerized exports at the Port of Long Beach, for example,
dropped 21.4 percent from a year earlier while edging up just 0.6
percent at the Port of Oakland. Outbound volumes were down an annual 2.6
percent at Savannah, and edged up just 2 percent at Jacksonville.

At Baltimore, October exports rose 3.7 percent on the month but
declined 13.4 percent on the year. October data were not available for
the Port of New York and New Jersey.

Editors’ note: Reality Check stories survey sentiment among
business people and trade associations. They are intended to complement
and anticipate economic data and to provide a view into specific sectors
of the economy.

The U.S. Commerce Department is scheduled to release October trade
data at 8:30 a.m. on Dec. 9.

** Market News International – Philadelphia **

[TOPICS: MAURC$,MAUDS$]