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International Trade:

US Cargo Execs: September Imports Rose, Exports Flattened

• October Imports Rose As Holiday Goods Entered Later Than Usual

• But Oil Imports Sharply Down In September in Volume and Dollar Terms

• Oil Imports Continued to Dip in October

By Gary Rosenberger
 

NEW YORK (EconoPlay) Nov. 8 – Imports of consumer goods rose modestly in September from August’s record levels – but oil imports were down sharply in both volume and dollar terms, which should offset any further widening of the trade gap, say cargo and port officials.

Exports flattened and are now seen likely to recede as the peak-manufacturing season in Asia draws down – and, along with it, the region’s hunger for raw commodities and capital goods that the U.S. exports to manufacturing nations, they say.

Preliminary October reports indicate that holiday goods entered the country later than usual, creating a minor spike upward, while the drop in oil imports leveled off somewhat.

Art Wong, spokesman for the Port of Long Beach, saw big year-over-year increases inbound and outbound in September – but noted the comparison was skewed higher by last year’s port congestion problems in Southern California that reduced container counts.

The Port of Long Beach saw container counts rise by 23% inbound and 27% outbound in September, with imports setting an all-time record. “Last year we had the backlog of ships and all the congestion, so it’s not surprising that we had a strong percentage increase this year.” Despite the new record, the inbound container count was up just modestly from August, Wong said.

Exports, while up strongly from a year ago, were down somewhat from August. “I never believe that one month makes a trend. Let’s wait a couple months and see if it continues.” Wong suspects that as China’s manufacturing season winds down, it is likely to reduce that nation’s hunger for raw commodities that the U.S. exports.

“Our numbers are good, not great – they aren’t knock your socks off numbers,” Wong said. If anything year-to-date data in Southern California is on the disappointing side, with inbound container volumes up just 4% at Long Beach and Los Angeles combined.

The slowdown in imports this year was offset by a healthy 12% pickup in exports through September, Wong added.

The neighboring Port of Los Angeles, the nation’s largest container port, saw inbound volumes rise 10% and outbound up 22% in September – but the port also drew an easy comparison because of last year’s bottlenecks.

Wong believes the U.S. trade gap will have widened in September, minus the impact of oil, which has been a major swing factor in recent month’s data.

Recent readings on oil imports would actually point to a narrowing in the trade gap, according to John Felmy, director of policy analysis and statistics for the American Petroleum Institute.

Felmy’s preliminary calculations indicate crude oil imports fell 10.3% August to September, a period when crude oil prices were down 5% on average.

Crude oil imports fell another 2.4% September to October, as prices dipped by around 3%, Felmy added.

Product imports fell 4% August to September, and prices dropped by another 10%. In October product imports recovered by 7.1% but were offset by an equal drop in price, he said.

An unusually late holiday import season appears to have beefed up October inbound volumes. “Our exports increased 20 percent and imports 10 percent for October compared to the same period last year,” said Belle Morales, vice president of sales and marketing at Dynalink Systems, an overseas transportation intermediary specializing in trans-Pacific trade in Inglewood, California.

“Airfreight volume both inbound and outbound grew by around 15 percent in October as last minute orders were being placed for the holiday season,” she added.

Meanwhile, cargo continued to be diverted to East Coast ports, as importers looked to diversify their distribution routes away from Southern California. “We noticed increases in capacity for most steamship lines on the East Coast route,” Morales said. 

At the Port of Baltimore, September imports were flat and exports were up by almost 14%, according to port spokesman J. B. Hanson. “The explanation is that we continue to aggressively pursue new customers, while enhancing the services to our existing customers. That, and our unique geographical location, helps us to continue our growth.”

“To me it just looks kind of like a normal peak season with the normal percentage increases – nothing more,” said Guy Fox of Guy Fox & Associates, Inc., a consultancy in international trade based in Yorba Linda, California. “We’re not seeing the sort of increases that have people waving their arms and singing.”

The chain stores he talks to appear to be taking a cautious stance – aware that consumers have much to fret but also betting that Christmas will still be Christmas even if the economic expansion slows. “We already see them bringing in Christmas stuff and putting it on sale early,” Fox said. “It’s as if discount stores are going to Las Vegas, putting twenty dollars on the black, and hoping to win.”

The new super-large vessels plying Pacific trade routes beckon a comeback for Southern California, which lost a lot of business last year due to ship diversions. “These vessels are too big to go through the Panama Canal, and we have the deepwater ports that can handle them,” Fox said.

On the export side, Fox sees “no real excitement” but only “gradual” improvement. “Really it’s because of the value of the dollar,” he said.

The gains in imports and exports probably point to the trade gap having stayed “close to the same” in September and October, he said.

Fox sees two clouds on the horizon. One is an uncertain consumer and what that bodes for the holiday season.

The other is a recurring sore on the distribution pipeline. Fox worries that as ports have resolved their bottleneck issues, railroad congestion is beginning to weigh on the distribution system.

Capt. Alistair MacNab, president of the Greater Houston Port Bureau and Marine Exchange, said trade flows are better in both directions, based on the ship counts he saw in September and October. “However, there’s nothing that I would call significant in the port right now.”

He thinks Houston has benefited from diversions of traditionally West Coast cargo to the Gulf and East Coast. “Shippers have decided not to put all their eggs into that one southern California basket,” he said.

A steamship executive specializing in Atlantic trade routes has been capacity constrained all year on the inbound side, and this peak season is no exception. “In our lanes, we don’t see a change one way or another,” the source said.

But he does see hints that retailers are nervous about the holiday season. He and some of his competitors have noticed softness in imports of seasonal goods, like toys, from Europe. “We haven’t seen the buildup that we’ve seen in past years,” he said. “It might have something to do with retailers trying to keep their inventories low, and maybe they’ll pull it in last minute – but they don’t have much more time.”

Another issue is that toy stores have given up competing with Wal-Mart, which famously sells toys as loss leaders to draw holiday traffic. “They source most of their toys in Asia, so it really hurts European toymakers,” he said.

He continues to see the export market recovering gradually. “Our balance (inbound and outbound) is better than at any time in recent years – we hope to have it continue,” he said. “Is it exciting? Any improvement in exports is exciting. We’re just thankful for the small gains.”

Export products he sees improving consist primarily of manufactured goods and bulk chemicals. Despite the progress on the export front, he believes the trade gap should continue to widen.

 The U.S. Commerce Department is scheduled to release international trade data for September on Thursday at 8:30 a.m. ET. The above commentary detailed September and looked ahead to October.

For more than a decade Gary Rosenberger’s Gary Rosenberger's column surveyed sentiment among business people. They anticipate economic data and provide a sounding into various sectors of the U.S. economy beyond the numbers. It has a proven and reliable track record.

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Last modified: 11/23/05