The Rising Influence of Rising Affluence

[DewDiligence]

Port of LA Logs Best Container Traffic Since 2008

[LA/Long Beach, which is served by UNP, is the largest port in the US by volume.]

http://online.wsj.com/article/SB10001424052748703960004575427441575841192.html

›AUGUST 13, 2010, 1:38 P.M. ET
By BOB SECHLER

A surge in Asian imports pushed July container traffic through the Port of Los Angeles, the largest in the U.S., to its highest level in almost two years.

Los Angeles reported its strongest month since August 2008 as imports climbed 21%. Nearby Long Beach had its busiest month since October 2008 as imports rose 33%. Both ports account for around 40% of U.S. inbound container traffic.

Freight haulers are unclear whether the upsurge in container traffic is sustainable, given still weak economic conditions and uncertainty about consumer demand.

The National Retail Federation, a trade group, said July would be the top month this year for container traffic through U.S. ports. It said volume was being driven in part by restocking and fears about a shortage of shipping capacity rather than an improvement in underlying sales expectations.

Yet Union Pacific Corp., the largest U.S. railroad, said it expects a solid peak season this fall. Fall is the traditionally when shipping volume is highest as retailers prepare for holiday shopping. United Parcel Service Inc. and others have also said that shipping volumes have yet to peak.

The National Retail Federation forecast an overall 15% rise in import cargo volume at major U.S. retail container ports this year, compared to last year's recessionary levels.

It said "unusually high percentage increases" in cargo volume this summer appear "to be an indication of shortages in shipping capacity earlier in the year rather than sales expectations" by retailers.

The report, prepared in conjunction with Hackett Associates, forecast a bit of a fall off after July, noting that the peak shipping season may simply have come earlier than normal this year.

John Gray, senior vice president of policy and economics for the Association of American Railroads, said Thursday that he remains "guardedly" optimistic intermodal freight volumes--meaning containers of imported consumer goods unloaded from ships onto railroads--will climb from July levels.

"I think there could still be some strength in August and September" following a 17% rise in July intermodal traffic, Gray said.

"If there is a [fall] peak, even if it's a mild one, it would be desirable as an economic indicator" that retailers think consumers have loosened purse strings for discretionary purchases.

He said the next few weeks could be key. Orders already in the pipeline could be canceled or slowed "if economic numbers for August fall off the edge," Gray said.‹