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Cargo Execs:
Focus Shifts To
Exports In Aug/Sep
- Imports Flat In August, A Bump Up In September
- Oil Imports Down In September Amid Price Upswing
- A Clear Narrowing Trend in Trade Gap Afoot
By Gary Rosenberger
NEW YORK (EconoPlay) Oct. 7 – The trade gap continued its narrowing trend in
August on a rising tide of exports, offsetting a steep rise in the cost of
imported oil, as the excitement shifted away from a longstanding fixation on
imports to a burgeoning export market, say cargo and port executives.
The narrowing should continue into September despite a bump up in imports as
holiday goods made their way, very belatedly, to warehouses and stores and
the volume of crude oil imports declined from August, they say.
The underlying picture is evolving as exports finally have begun to benefit
from the weaker U.S. dollar and from Asia continuing to swallow up raw
commodities and capital goods of U.S. origin, they add.
Two critical hints pointing to the lack of any real import surge during what
is normally the peak period lie in the lack of a peak-season surcharge on
inbound cargo and no congestion at all among ports in southern California.
Belle Morales, vice president of sales and marketing for Dynalink Systems in
Los Angeles, saw imports improve in September after a flat summer, but the
major development was on the export side. Dynalink is an overseas
transportation intermediary specializing in trans-Pacific trade.
“We had an impressive increase for imports in the month of September with a
30 percent rise compared to the same period last year, while exports jumped
70 percent,” she said.
Hurricane Katrina did not appear to stymie the volume of cargo but it sent
shippers scampering to find alternative ways to bring it in. “We had to
figure out the fastest, most economical way to ship goods to the U.S. using
alternative ramps to New Orleans, such as Houston, Savannah, and Memphis.
Our intermodal department had to work double time for various inland moves
in terms of diversion.”
Art Wong, spokesman for the Port of Long Beach, saw inbound containerized
cargo jump 11% in August with outbound up a far more impressive 40% from a
year ago.
He noted, however, that the jump was largely fueled by market share gains
taken away from competing ports that don’t have the facilities for the
behemoth container ships that have been plying the Pacific routes for more
than a year.
The gains at Long Beach clearly were dragged down by minimal gains at the
larger sister Port of Los Angeles (inbound up 1%, outbound up 4%).
“August is getting into the peak season, but the peak doesn’t look as big as
in previous years. It’s a little peak now,” Wong said. Part of it is that
the holiday season is taking on less urgency as retailers find ways to
create year-round reasons to shop. “The only questions for importers going
forward are how strong is the economy and what will high heating oil bills
do to Christmas buying.”
Wong said the whole year has been disappointing for southern California
ports, which expected combined growth rates of 10% to 12%. So far the tally
is 8% on exports and just 3% on imports. Diverted cargo – on anticipated
congestion that never materialized in 2005 – is only part of the problem. “I
just think the economy isn’t that strong.”
Wong thinks the excitement is moving to the export side, even though that
continues to far lag imports. “We’ve consistently had very good export
numbers this year,” he said. “I think it’s mostly Asia and China needing raw
materials – cotton, hides, even wastepaper – everything and anything they
use for exporting goods.”
Guy Fox of Guy Fox & Associates, a consultancy on international trade in
Yorba Linda, California, said this peak season is marked by a lack of a
peak-season surcharge. “If there’s no congestion you can’t have a
surcharge,” he said.
He further noted that with ever-larger container ships entering the West
Coast from Asia, shippers are not running into capacity constraints as they
did in prior peak seasons.
Fox saw a bump up in imports in recent weeks after a flat summer. “For
August it was mainly back-to-school programs that came in late using
just-in-time distribution concepts, and now they’re topping it off with some
Halloween and Christmas stuff,” he said.
He expects to see a surge in holiday-related imports in the next three to
four weeks, “and then it will start tapering.” He thinks stores are bringing
in about “the same amount of goods as last year.”
Fox, too, sees the industry’s attention shifting toward exports. “I think
exports are starting to perk up because of the weaker dollar,” and he
expects that trend to continue. “I think the trade gap will narrow, and if
you take oil out of the equation it is definitely narrowing.”
Ron Planting, economist for the American Petroleum Institute, noted a modest
uptick in the average price of crude oil in September that was accompanied
by a more than offsetting decline in volumes.
“Believe it or not, the average price of crude in September was $65.55 up
from $64.98 in August – that’s just 57 cents higher,” he said. The real
change was in import volumes, which were roughly 9.1 million barrels a day
in September, down from 10.2 million barrels a day in August.
“I think it’s pretty clear looking at our weekly numbers that the hurricanes
were a part of that drop off,” he said. He further argues that the
hurricanes could prompt an upward shift in imports going forward. “When you
lose 1.5 million barrels a day of production in the Gulf of Mexico, you need
crude oil from some place else.”
West Coast “port congestion has not taken place and this is a peak period,”
observed Capt. Manny Aschemeyer, executive director of the Marine Exchange
of Southern California.
Through August, vessel counts have been “far below” what they were in 2004.
Aschemeyer attributes that to diversions away from southern California and
to larger ships that can bring in more goods on fewer visits.
But there was a “good upswing” in September of container ship counts. “The
bad news is we have seen a decline in other categories, so the gross ship
counts are still not to the levels we enjoyed in previous years.”
The jump in container counts is clearly an early holiday effect. “I went to
a store last week and saw a whole section with just Christmas stuff. I went
to the manager and asked him if he couldn’t at least wait until Halloween
was over,” Aschemeyer said.
A second factor is that Gulf Coast hurricane activity re-diverted some
carriers back to their traditional southern California gateways, he added.
Eastern ports generally saw a flat August with some evidence of a swing to
exports.
The Port of Baltimore saw such a change. “We were down in imports by 7.4
percent and for exports we were up 4.3 percent,” said J.B. Hanson, spokesman
for the port. Total imports and exports at the port are up a modest 7.2%
year-to-date, but Hanson expects 2005 to end with a double-digit increase
for the fourth consecutive year as seasonal activity picks up.
“August for us was kind of flat,” said Byron Miller, spokesman at the Port
of Charleston. A comparison to last year’s container count shows flat
exports, with imports up by just 4%. He noted that August and early
September are a “lull” period anyway because European factories tend to shut
down for vacation.
As for September, Miller said the port could be helped and hurt by Katrina
and Rita. While there were diversions to Charleston, there was also a
slowing of intermodal goods bound for the New Orleans market and
hurricane-related disruptions of railway and truck routings.
“Diversions of South American cargo to our port was definitely a plus, but
it’s unclear whether gains from those diversions will be offset by losses
suffered by businesses in the path of Katrina,” he said.
He continues to see an upward spike in imports, mostly apparel, from India.
“India is blowing the doors off – the ships are so full and the increases
are phenomenal,” Miller said.
“I don’t have specific numbers for September, but they are up substantially,
we know that,” said Capt. Alistair MacNab, president of the Greater Houston
Port Bureau and Marine Exchange, a leading gateway for dry bulk, containers
and oil.
Part of that growth was Katrina-related as goods were diverted from New
Orleans. “But I think the growth would have been extraordinary anyway.”
Because MacNab logs only ship visitations, he can only determine the amount
of trade activity and not its direction. “I can only surmise that it picked
up fairly evenly in both directions – but there’s nothing that tells me in
my numbers which way the trade gap is going.”
Still, vessel counts were up 10% in September over last year. “The real
doozey was crude oil, which was up 49.5 percent over last year,” MacNab
said. That’s against a recent trend for monthly growth rates of 8%. MacNab
suspects that diversions were largely behind that jump along with an even
greater need for imports because of shutdowns of production facilities in
the Gulf of Mexico.
MacNab described minimal disruptions to the port from Hurricane Katrina. But
Rita was a far more serious issue as dockworkers and millions of others
evacuated, and refineries in Beaumont, Port Arthur and East Texas suffered
temporary damage. He expects a near complete recovery in the next two to
three weeks.
International trade data for August is due to be released on Thursday. The
above commentary focused on both August and September.
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The payrolls reality based Economic Forecasting Service released yesterday correctly anticipated the far
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