REPEAT: REALITY CHECK: Port Volume Solid Sept; Yr-end Steady

Repeats Story Initially Transmitted at 14:48 GMT Oct 24/10:48 EST Oct 24

--Port Spokesmen Cautiously Upbeat About 2018 Prospects

--Fewer, But Bigger Ships Point To Record Volumes

By Vicki Schmelzer

     NEW YORK (MNI) - Trade volumes remained solid in September, and should

remain steady into year-end, according to MNI's exclusive interviews with U.S.

port spokesmen for the latest REALITY CHECK. 

     Spokesman were also cautiously upbeat about 2018 prospects, but stressed

that much depends upon the health of the U.S. and global economies.  

     In September, the Port of Los Angeles saw 763,785 Twenty-Foot Equivalent

Units (TEUs) move through the port, up 2.15% from September 2016 volumes. 

     Calendar year-to-date 2017 TEU volumes at the port stood at 6,890,994.05,

up 8.21% over September 2016. Volumes are poised to be a new yearly record for a

Western Hemisphere port. 

     "Even if things taper off a bit, we should be able to get to that 9 million

mark, which is our goal this year," said Phillip Sanfield, Director of Media

Relations at the Port of Los Angeles. 

     Calendar-year 2016 volumes were a record-breaking 8.86 million total TEUs

and 2017 volumes are expected to easily surpass that, barring something

unexpected, he said. 

     In 2016, the Port of LA had an "unusually strong" fourth quarter, driven by

a one-off rise in trade volumes due to South Korean shipping firm Hanjin

Shipping's bankruptcy in late August, he reminded. 

     Some containers that might have gone to sister port, the Port of Long

Beach, where Hanjin had operations, ended up instead at the Port of LA. This

caused a late-year spike in TEU levels, Sanfield said. 

     November 2016 TEU volumes were 877,564 TEUs making it "one of our best

months ever," he said.

     That 2017 TEU volumes may be a new yearly record, despite the skew seen in

late 2016, is therefore even more impressive. 

     The Port of Los Angeles is seeing "fewer ships coming in, yet more cargo,

so that speaks to our ability to handle the larger ships which keep coming,"

Sanfield said.

     He expected this trend to continue, because "that's where shippers are

finding their cost savings - in these larger ships."

     As example of size, this month the Maersk Evora docked at APM Terminals

Pier 400, "fully profiled," which means "fully loaded, nine-high" (nine

containers high) above deck, "the first for any U.S. port," Sanfield said. 

     This was made possible by the newly raised cranes at the APM terminals,

"the tallest in America," that are "high enough now" to handle larger ships, he

said. 

     By the time the ship "leaves the Port of LA, it will have offloaded and

then reloaded 24,846 TEUs. That's believed to be a world record for a single

vessel port call," Sanfield said. 

     Unlike cargo flow in Europe, where ships may stop at multiple ports before

reaching their destination, the Ports of LA and Long Beach are typically the

sole stop, because the bulk of cargo comes from Asia. 

     "Most of it, if not all of it, gets unloaded here, so we have this unusual,

this much larger, load of cargo, coming off," Sanfield said.  

     Sister port, the Port of Long Beach, reported 701,619 TEUs in September

versus 692,375 TEUs in August. September TEUs were up 28.3% over September 2016

(546,805 TEUs) and 2017 totals so far are 5,565,713 TEUs, up 8.9% year-to-date.

Totals for calendar-years 2016 and 2015 were 6,775,171 TEUs and 7,192,066 TEUs

respectively. This year, the port is on track to break the record 7,312,465 TEUs

seen in 2007.

     The Port of South Louisiana, the largest tonnage port in the Western

hemisphere, released its Q3 2017 Tonnage Report last week, with January to

September 2017 total tonnage at 228.7 million short tons, up 7% over

year-to-date September 2016. 

     Even lowballing monthly estimates for the remainder of the year would put

total port tonnage for 2017 well above the 294.9 million total short tons seen

in 2016. 

     "We're have the record for tonnage and we are going to break it again this

year," Port of South Louisiana Executive Director Paul Aucoin told MNI. 

     The Port of South Louisiana offers "what the world needs," he said, "We

feed the world and we provide energy for the world." 

     The port's top two exports are grain and crude oil. 

     "We are the largest grain exporter in the United States. Over 50% of the

grain that leaves the U.S. leaves through one of our seven grain elevators - we

ship grain to over 90 different countries," Aucoin said.

     On volume prospects for 2018, "I have not seen anything to indicate that we

are going to slow down at all. I only see indications of increased tonnage

across the board - on grain, crude oil, everything," he said.  

     Traffic at the Port of South Louisiana is booming and should continue to do

so for a variety of reasons, he said.

     The "cheap and abundant natural gas" in the area has encouraged $23 billion

in investment in new plants and factories, he said. 

     "When those companies come on line - that is going to be a game changer for

us," Aucoin said. 

     For example, two firms, one China-based and one New Zealand-based, have

plans for methanol plants in the area, he said. 

     In April, Chinese company Yuhuang Chemical announced that work had begun on

a $1.85 billion methanol manufacturing complex in St. James Parish, with an

expected completion date of Q4 2019, "when the facility will begin distributing

methanol by truck, rail, barge and ocean vessels," according to the release. 

     "Management expects a large portion to be distributed locally with the

balance exported primarily to Europe and China," the Yuhuang Chemical release

said.

     Also, Todd Corporation, New Zealand's leading independent oil and gas

producer, has been partnering with ZEEP, an Austin, Texas-based energy company

in a joint venture, South Louisiana Methanol, also at St James Parish. 

     On the East coast, the Port of New York and New Jersey will publish volume

numbers for September later in the month. 

     The latest year-to-date data for August showed total TEUs at 4,438,026,

with total rail lifts at 374,193. With four more months left in 2017, both are

on track for new records. 

     "So, obviously it's been a very strong year. Other ports are reporting

strong numbers as well, so in one respect, we're not an outlier," said Sam Ruda,

Deputy Director-Port Department at the Port of NY & NJ,  

     The increased port volumes are an indicator that the U.S. and global

economies are "humming along," he said. 

     Year-to-date import TEUs at the end of August were up 5.7% over August 2016

and more importantly, export TEUs were up 3.0%, "which is good," Ruda said.

     Like other ports, which have taken measures to accommodate larger container

ships, the Port of NY & NJ is also seeing "less vessel calls, but higher

volumes," he said. 

     Auto shipment "volumes have been strong" in 2017 with calendar year-to-date

volumes in August up 11.9% over August 2016, he said. 

Looking ahead, Ruda saw nothing, nor was there "any indication from our

stakeholders, our tenants or our shippers" that would suggest port volumes would

"fall off a cliff" next year.

     Indeed, the volume data would suggest "just the opposite," he said.

     One noticeable trend is that the seasonality in the shipping industry is

far less pronounced than in prior years, Ruda said. 

     In the past, the volume "crescendo" came typically in July and August, but

the "Christmas window" today now covers June through September, or even early

October, he said. 

     And on a calendar basis, January to December, the seasonality "has

moderated," he said.

     With China importing more ahead of the Lunar New Year, "you don't see the

huge downturn after the season," Ruda said, "It's a very interesting

evolutionary trend." 

     U.S. ports again noted a rise in empties for a variety of reasons, some

benign, some not. 

     Total empties at the Port of Los Angeles stood at 246,668.95 TEUs in

September, up 15.45% over September 2016, and "drove up overall volumes last

month due to trade policy changes impacting waste paper exports to China," the

port noted.

     Paper/waste paper was the top containerized export for the port in 2016, so

what happens with regard to China "is significant for the U.S. and particularly

for our port," Port of LA's Sanfield said. 

     On July 18, China notified the World Trade Organization that by the end of

2017, the country "will forbid the import of 4 classes, 24 kinds of solid

wastes, including plastics waste from living sources, vanadium slag, unsorted

waste paper and waste textile materials."

     At an Oct. 3 meeting of the WTO Committee on Import Licensing, five WTO

members, including the U.S. and European Union, questioned China's import ban on

solid waste "particularly for certain scrap materials," with all five countries

seeking "more information on which types of materials would be affected" the

World Trade Organization noted. 

     "The United States said it had significant concerns with the changes to

import licensing surrounding China's implementation of an existing import ban on

plastic and paper scrap," the WTO said, adding that "China's delegation

responded that it will forward these concerns to its capital for consideration."

     Editor's Note: MNI's REALITY CHECK on U.S. ports offers insight into the

U.S. economy, with ramifications for trade and retail sales. The REALITY CHECK

series is intended to complement and anticipate economic data. 

     Advanced trade data for September will be released Thursday, Oct. 26 at

8:30 a.m. ET. 

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com