Port Traffic Slows Ahead of Holidays, Court Denies Bid to Block Albertsons Dividend, Mortgage Applic
Port Traffic Slows Ahead of Holidays
U.S. container ports will remain relatively quiet for the rest of 2022, even as retailers expect a busy holiday season, according to the latest monthly tracking of cargo imports by the National Retail Federation and consulting firm Hackett Associates.
“Cargo levels levels that historically peak in the fall peaked in the spring this year as retailers concerned about port congestion, port and rail labor negotiations and other supply chain issues stocked up far in advance of the holidays,” Jonathan Gold, the retail trade group’s vice president of supply chain and customs policy, said in a statement. The trade group and Hackett are projecting U.S. port cargo traffic to decline about 9% from year-earlier levels in November and December.
“With a rail strike possible this month, there are still challenges in the supply chain, but the majority of holiday merchandise is already on hand and retailers are well prepared to meet demand,” Gold said.
On Wednesday, a Teamsters division known as the Brotherhood of Maintenance of Way Employees, among the nation’s largest railroad worker organizations, extended the end of a cooling-off period to Dec. 4 from Nov. 20 as unions and railroad companies look to avert a potentially costly strike.
Rail unions have scheduled a Nov. 21 vote on a tentative contact reached in September, the last time a strike was averted. Separately, talks are also ongoing on a contract affecting dockworkers at several ports in the U.S. West.
Ben Hackett, whose consulting firm tracks global port traffic with the retail federation, said consumer demand for imports began to flatten in mid-2022 and that trend is expected to continue through the first half of 2023. “Carriers have begun to pull services and are looking at laying up ships,” Hackett said in the NRF statement.
Court Denies Bid to Block Albertsons Dividend
Albertsons has prevailed in at least one legal challenge to its planned payout of a $4 billion dividend ahead of its proposed $24.6 billion acquisition by rival supermarket chain Kroger.
The U.S. District Court for the District of Columbia on Tuesday denied a joint request filed earlier this month by attorney generals for D.C., California and Illinois to temporarily halt the dividend, originally slated to be issued on Nov. 7, until regulators review the proposed acquisition and merger.
State officials argue that a dividend of that size could harm Albertsons' ability to compete and meet payroll and other expenses if the merger is denied or otherwise called off. Still pending is a similar request by the state attorney general in Washington, where a King County judge has scheduled a Nov. 10 hearing on the matter after issuing a temporary hold last week.
Boise, Idaho-based Albertsons Cos. said in a statement that the state attorneys’ claims lack merit, and the company remains “fully committed to investing” in its stores, workers and digital technologies. The company said that after the proposed dividend payout, it will have approximately $3 billion of liquidity, including $500 million in cash and $2.5 billion under an asset-based lending facility.
The acquisition could create a combined company with nearly 5,000 stores, though officials of Cincinnati-based Kroger have said the company plans to divest up to 375 stores to garner regulatory approval based on preserving competition.
Mortgage Applications Drop
Mortgage applications declined 0.1% for the week ended Nov. 4 from the prior week as consumers continued to shy away from new home purchases and refinancings with interest rates still far above year-earlier levels.
“Mortgage rates edged higher last week following news that the Federal Reserve will continue raising short-term rates to combat inflation.” Joel Kan, the trade group’s deputy chief economist, said in a statement Wednesday. Kan noted the average 30-year, fixed rate mortgage remained above 7% for the third consecutive week, with other types of loans remaining at elevated levels.
The trade group said new purchase applications were down 1% for the week and declined 41% from the same week a year ago. Refinance applications were down 4% for the week and down 87% for the year.