FEATURE-Holiday miracle needed for turnaround at U.S. ports
* 2009 U.S. import cargo volume seen as lowest since 2003
* Ports hope for late holiday bump in shipments
* Port of Los Angeles sees flat traffic through year end
LOS ANGELES, Oct 20 (Reuters) - Foreman Danny Miranda remembers the days when the Los Angeles and Long Beach, California, ports were so jammed that ships waited in line to unload. Now the lingering recession has longshoremen waiting in line for work.
After a year of grappling with fewer shifts and falling wages, Miranda and other union port workers hope a surprise jump in September retail sales will fuel a late-season bump in holiday cargo. [ID:nN08474084]
"Out of seven days, only two we see work. The last quarter it would be four days out of the seven," said Miranda, a veteran port worker and president of the International Longshore and Warehouse Union Local 94 representing foremen.
"We're always hoping for that. But we don't see that," Miranda said of a pick-up in demand.
Major retailers, such as Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and Nike Inc (NKE.N), use the ports of Los Angeles and Long Beach to pipe tons of clothes, televisions and other goods from Asia and the Pacific Rim to U.S. shopping malls for the holiday season.
Many of them have cut their store inventories by as much as 25 percent this year, fearing they could again get stuck with a glut of merchandise like the one that ate into profits in 2008.
The bulk of holiday shipping hits U.S. ports in August and September. This year, the number of manufacturers shipping to U.S. companies fell 5 percent from August to September, the steepest drop since February, according to research firm Panjiva.
While September usually brings an increase in holiday cargo, imports at the ports of Los Angeles and Long Beach sank last month, falling 16 percent and 19 percent from a year earlier, respectively.
Overall, import cargo volume at the nation's major retail container ports is expected to total 12.5 million containers in 2009, down nearly 18 percent from 2008 and the lowest since 2003, according to the National Retail Federation and IHS Global Insight.
"There are probably not a lot of companies that are expecting a real V-shaped recovery here given the continuing constraints on household perception of wealth," said Paul Bingham, an economist with IHS Global Insight.
ON THE WATERFRONT
There have been similar slowdowns at Southern California ports, where workers fear the holiday bump has come and gone.
Warehouse worker Anthony Mora, 30, has been looking for a job in California's Inland Empire, a major distribution hub about one hour east of Los Angeles, for more than a year.
"It's really slow ... We need the economy to get better," Mora said.
Unemployment of nearly 10 percent and tougher rules on credit cards and home equity loans likely will rein in splurges on holiday gifts -- even for some people who are working.
But some industry experts say the decision to slash orders is overdone, especially in the event of a holiday miracle in which shoppers feel bold enough to spend.
Sixty percent of chief financial officers at big U.S. retailers still fear that the biggest risk to holiday sales is excess merchandise, according to a poll from accounting and consulting firm BDO Seidman LLP. But 40 percent worry that shortages are the biggest concern.
It may be too late for many retailers to pull the trigger and order more inventory to cash in on any late surprise in demand, since it takes about six weeks for goods to get shipped and move through distribution systems.
For those looking to home-grown manufacturers to fill in the gap, few factories may be still available to cater to last-minute demand. [ID:nN19381752]
"If you haven't ordered something by early September you're running it really close," said Art Wong, spokesman for the Port of Long Beach.
Even when economic growth returns, economist Bingham doesn't expect port traffic to return to the levels seen before the global financial crisis. He expects post-recovery shipping to be more like levels seen around 2003, "before things got going in a heated fashion."
At the Port of Los Angeles, Kathryn McDermott, the port's deputy director of business development, agrees that the good old days of double-digit growth may be over.
"That's not part of what we're planning for," she said. (Editing by Michele Gershberg and Gerald E. McCormick)
- China food scandal spreads, drags in Starbucks, Burger King and McNuggets in Japan |
- U.S. court rulings create new uncertainty over Obamacare
- Israel pounds Gaza despite international peace efforts |
- EU readies possible capital, tech sanctions on Russia
- Train carrying MH17 bodies on final journey reaches Ukraine city |