Looks like Santa Claus is coming to town already.
As cargo traffic at Southland ports continues to break records, the first Christmas goods are arriving months earlier than last year.
Though some of the traffic can be attributed to larger ship payloads, retail industry analysts say holiday shipments actually are showing up at the ports earlier than ever before. It’s a reaction to past mid-year bottlenecks at the ports.
“Retailers and logistics people learned that the sooner you get the goods over here the better,” said Craig Shearman, an analyst with the National Retail Federation. “Over the past few years, we’d normally start to see Christmas goods come over starting in late June or early July. Not so anymore.”
A trend is emerging where retailers, manufacturers and logistic companies are bumping up shipments of goods they know will be in demand such as Xboxes and Christmas trees so they’ll have room on ships for more of the hot items later in the year.
“It just makes sense,” said Paul Bingham, an economist at Global Insight Inc. “The ships are emptier in the beginning of the year than they are in August and September, so why not ship goods then that you know will be in demand in November and December?”
Traditionally, the period between the Chinese New Year, which fell on January 29 this year, and early July, is what people in the shipping business call the trough, or dead season. The volume of 20-foot equivalent units (or TEUs, the measurement used in the shipping industry to gauge container traffic) in the past would begin a slide in December that continues to March. Volume then gradually starts to pick up, until peaking in September to November, when it’s anywhere between 25 percent and 80 percent higher.
Nowadays, the trough between January and July is getting smaller as manufacturers keep their overseas factories humming at a steady pace year-round. Retailers and manufacturers are taking advantage of off-peak season rates, which Shearman said can be 10-percent cheaper, to ship goods they know will be in demand.
“Manufacturers know that everyone is going to want Christmas lights in August and September,” said Don Snyder, the director of the Port of Long Beach trade and maritime services division. “So it makes sense for them to ship them over as early as possible.”
Seeing shipments for Christmas arrive earlier and earlier might also have greater implications, Bingham said.
“This influx of cargo is also great for the local economies and port workers, who in the past normally wouldn’t be working this time of year,” he said. “This may also be a sign of strong expectations from the retail sector for the upcoming holiday season.”
Increased activity
A longer pre-holiday shipping season comes on top of overall increased activity at the ports of Los Angeles and Long Beach, particularly in business from China, according to a study released last week by the Los Angeles County Economic Development Corp.
The amount of containers handled at the two ports is on track to increase in 2006 to 15.6 million TEUs, according to the annual LAEDC international trade trends and impact report. That’s 10 percent over 2005’s record total. The dollar amount of goods passing through is also on pace to increase; the report predicts an 11 percent surge for a grand total of $326 billion for the year.
More than 43 percent of all waterborne goods imported to the U.S. come through the Southland ports.
“International trade will continue to be a reliable employment engine this year in the Los Angeles five-county area,” said Jack Kyser, LAEDC chief economist.
The report also notes that the Los Angeles International Airport handled a record level of cargo in 2005, nearly 2 million tons.
America’s top trading partner continues to be China, with two-way trade in 2005 totaling $102 billion, according to the Los Angeles Customs District. Next highest was Japan with $46 billion. Germany and the United Kingdom, also posted sizable increases in trade for last year, up 15 percent to $9 billion and up 13 percent to $5.6 billion, respectively.
Among the problems the report mentioned were crumbling infrastructure, increased pollution, a widening trade deficit and port security needs, as well as relations with truckers.
“We’re breaking records every month,” said Art Wong, a spokesman for the Port of Long Beach. “We’re seeing the busy season get pushed earlier and earlier in the calendar.”
