Peak misconception

Peak misconception While October is seen as traditional U.S. import pinnacle, Zepol statistics show no consistent peak month.

By Eric Johnson

   Inbound U.S. containerized cargo crested in August to a near historical high ‘ not just for August, but for any month on record.
   During the month, 2.07 million TEUs entered U.S. ports, according to data supplied to American Shipper by Minneapolis-based trade intelligence company Zepol Corp. (Zepol’s statistics measure inbound containers using U.S. Customs data straight from carrier bills of lading.) August container volume surpassed that of every month the last eight years, save for October 2006, when volume hit 2.33 million TEUs. And that was nearly two years before the global financial meltdown in late 2008 knocked containerized trade back to 2005 levels.
   The fact that the container crescendo this year came in August has sparked talk that the so-called peak season arrived early this year.
   Indeed, Zepol statistics show U.S. containerized imports fell to 1.97 million TEUs in September and 1.92 million TEUs in October. On the other side of the transpacific, volume at Asia’s nine largest ports fell a collective 6 percent from August to September, according to the maritime news service Alphaliner.
   ‘Despite the fact that all main container ports still recorded a positive growth compared to last year, the growth rate has slowed down considerably compared to the earlier part of the year,’ Alphaliner reported in mid-October.
   That downward development was presaged by Hackett Associates and the National Retail Federation’s monthly Port Tracker, which follows containerized imports at 10 major U.S. ports. The October Port Tracker reported volume of 1.42 million TEUs in August at those 10 ports. For September, the report predicted volume of 1.37 million TEUs and for October, 1.32 million TEUs.
   The downward trend is notable for two reasons:
   ‘ As NRF put it, ‘October has long been the busiest month of the year as retailers rush to fill shelves with merchandise for the holiday season.’
   ‘ September was the first month in 10 in which U.S. import volumes fell month-on-month.
   The drop-off from August to September and then from September to October has not been too drastic ‘ 4.6 percent and 2.7 percent, respectively, according to Zepol statistics. But it has emphasized the theory that peak season came early this year.
   Or has it? Looking through Zepol’s historical month-by-month statistics from 2003, one thing jumps out: the ‘traditional’ peak season hasn’t been very traditional, or consistent. As the chart shows, the peak month of U.S. imports has jumped around quite a bit the last eight years, never settling on any one month in which importers and container lines could definitively say ‘this is the typical peak month.’
   Take the period from 2004 to 2008. The peak month of imports in those years varied widely, as did the peak volume ‘ from 1.55 million TEUs in November 2004 to that record 2.33 million TEUs in October 2006.
   What the chart also shows is that the economic downturn in 2009, in statistical terms, looks like more of a correction in U.S. import container growth rates than it does a cataclysmic sea change. Even at its most dire, the peak month in 2009 was still higher than the peak month in 2005.
   So it seems the notion that peak season generally occurs in October is a bit misguided. This year, concerns over container shortages and capacity on the transpacific led importers to move their holiday season inventory earlier than normal. But past years have rarely gone by the textbook.
   In 2004, a range of capacity issues in the dominant Los Angeles-Long Beach port gateway led to crippling backlogs of cargo. Memories of those logjams inevitably influenced ocean freight decisions the following year, when (like this year) the peak month was August.
   That rush of cargo in the record-busting 2006 (import volume reached a record 21.65 million TEUs) pushed supply chain capacity to its breaking point. And so it was little wonder that in 2007, the peak month was earlier than ever, in July, even as a new yearly volume record was established (22.39 million TEUs).
   In fact, U.S. import volume through October 2010 (18.20 million TEUs) tracked remarkably close to the first 10 months of 2006 (18.07 million TEUs), 2007 (18.76 million TEUs) and 2008 (18.24 million TEUs).
   Where the difference may be seen this year is in the variance between that near-record peak month in August and the lows of this season and next. February volume this year was 1.25 million TEUs, down significantly from the 1.72 million TEUs handled in February 2008. Will February 2011 look more like that in 2008 or 2010?
   Either way, it’s clear the peak season isn’t a guaranteed mid-autumn ritual. Events like port, container or vessel capacity shortages from six months to a year before have a much larger bearing on when shippers move their goods than does a specific calendar month.