The growth in import cargo that began in the second half of 2020 is a credit positive for gateway ports, according to a Moody’s Investors Service credit outlook published Monday.
The twin ports of Los Angeles and Long Beach, which handle more than a third of total U.S. imports and 50% of U.S. imports from Asia, recorded a 50% year-over-year volume increase in February, Moody’s wrote.
“The level of activity is driving revenue growth and a rapid recovery in trade compared to the deeper contraction during the global financial crisis of 2008,” Moody’s analysts wrote.
The National Retail Federation forecast March 8 that the trend will continue with 23% growth in retail imports expected through the first half of 2021.
Imports at the nation’s largest retail container ports are expected to grow dramatically during the first half of 2021 as increased vaccination levels and continued in-store safety measures allow additional shopping options, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates.
“NRF is forecasting what could turn out to be record retail sales growth in 2021, and retailers are importing huge amounts of merchandise to meet the demand,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a statement.
Strong consumer spending and inventory rebuilding in the U.S. spurred the growth in import cargo that began in the second half of 2020, according to Moody’s.
The benefits of the increased revenue outweigh what Moody's called the short-run negative effects of congestion.
The surge has caused supply chain problems resulting in delays at ports, an increase in ocean freight rates and has limited the availability of empty containers for U.S. exporters.
The Port of Los Angeles had 62 ships backed up waiting to unload in mid-February and was forced to divert some traffic to other West Coast ports.
“It was a very difficult decision to make,” Gene Siroka, POLA’s executive director said during a February video
The backlog was also affecting the Port of Oakland, because some of the ships stop in Los Angeles before heading north with shipments intended for that port, Siroka said.
“Congestion will persist into the summer,” Moody’s said, “but pressures will increasingly ease as vaccinations expand the availability of longshore workers in the months ahead, and as ocean carriers spread services to less constrained ports.”
Though congestion won’t have a material negative effect for ports, Moody’s analysts said that Los Angeles could permanently lose traffic to ports like Savannah, Georgia, where the initial backlog is rapidly declining.
