REPEAT REALITY CHECK: US Ports Bustling, Set For Records

--Repeat of Main Wire story Aug 21 10:18 am

--Import Volumes At Records, Select Exports Improving Also 

--Increased Cargo Traffic Points To Improved US Consumer Sentiment/Purchases

By Vicki Schmelzer

     NEW YORK (MNI) - Ports across the United States have been bustling this

summer, with record monthly cargo volumes seen in some cases, an indication that

U.S. demand for foreign products and services continues to expand, exclusive

interviews with port spokesmen for this month's REALITY CHECK showed. 

     While the lion's share of traffic has been seen in imports, the spokesmen

noted that they are seeing higher export volumes also in some cases, which could

provide some offsetting factor as far as the trade gap is concerned.

     There are myriad factors at play, but the sense is that U.S. retailers, in

their forward planning, are betting on improved consumer sentiment and increased

purchases later in the year, port spokesmen said.

     The high cargo volume seen in recent months at the Port of Los Angeles is

"a direct reflection of the economy and consumer confidence," said Philip

Sanfield, Director of Media Relations at the Port of Los Angeles. 

     "The retailers want to be prepared for the year," he told MNI. 

     The peak season for shipping is typically August, September and October so

that retailer firms can gear up for the holiday season later in the year, he

said.

     In the fiscal year ending June 30, Port of Los Angeles terminals handled a

total of 9,205,755 TEUs or twenty-foot equivalent units, which was a 9.7% rise

over the 8.39 million TEUs seen in the prior fiscal year. 

     As background, in 2006, Los Angeles became the first port to surpass 8

million TEUs. In calendar year 2016, this record was broken with volumes of 8.8

million TEUs. 

     "So, we basically last year finally came back after the recession almost a

decade later and we're back where we were in '06," Sanfield said.

     In July, the Port of Los Angeles reported container volumes of 796,804

TEUs, which was the busiest July in the port's 110-year history and topped the

prior July record of 761,326 TEUs back in 2006. 

     In terms of year-to-date volumes, "we are tracking 9.5% ahead of last year;

we're very optimistic that we are going to see a record year this year,"

Sanfield said. 

     July loaded imports, at 417,090 TEUs, were up 13%, and loaded exports, at

154,925 TEUs, were up 17%, a sign that the summer cargo story is not solely

about imports. 

     "We have also seen a bump in exports month on month, so that's been a good

sign as well," Sanfield said. 

     In early August, the International Longshore and Warehouse Union extended

their contract with the Pacific Maritime Association (PMA) until 2022, which was

good news for the Port of Los Angeles and other West Coast ports. 

     The new agreement extended the current contract, set to expire July 1,

2019, by three years. 

     "We are really happy that we have five years of labor stability," Sanfield

said. 

     The Port of Long Beach, a sister port, reported record container volume of

720,312 TEUs in July, which was a 13.1% increase over July 2016. It was also the

fifth straight month of volume increase. 

     "A number of factors" are behind the beefy volumes seen in recent months,

said Duane Kenagy, Interim Deputy Executive Director at the Port of Long Beach. 

     The consolidation of global shipping alliances from four to three alliances

(now 2M Alliance, Ocean Alliance and THE Alliance) "has caused some changes in

what terminals are served here in this complex and that has been relatively

favorable to the Port of Long Beach this year," he said. 

     This has allowed the port to recover from the blow of South Korea's Hanjin

Shipping seeking bankruptcy last year, he said. 

     "Trade in general is up this year, particularly in the San Pedro Bay

gateway," and both the Port of Los Angeles and Port of Long Beach have "seen

good volumes," Kenagy said. 

     Vessel "bookings are strong and the terminals are being told to prepare for

a fairly strong peak season this year, he  said.  

     The Port of Long Beach anticipates that September and October will be the

"peak months" this year, although an "early peak" is possible, Kenagy said. 

     "We are expecting a favorable August," he said of this month's cargo

volumes.  

     On overall 2017 cargo volumes, "right now we are projecting higher numbers

than 2016," but "whether we get to another record year - we will have to see how

the fall develops," Kenagy said.  

     Unlike ports that handle container ships for the most part, the Port of

Corpus Christi deals mostly with liquid bulk, which means steadier trading flows

throughout the year, noted John P LaRue, Executive Director at the Port of

Corpus Christi. 

     "We're pretty balanced at least in the volumes that we see. I can't point

to a busy or a slow time," he told MNI.

     "Eighty-five percent of our business is liquid bulk, so that's moving all

the time," LaRue said.

     In late spring/early summer, cargo flows pick up "when there is more demand

for gasoline and things like that, but then in the fall and winter, home heating

oil will pick up as the product is moving," he said.

     With the Port of Corpus Christi handing more crude oil exports of late,

"that's world-wide demand, so it's not dependent on U.S. flow," LaRue said.

     As a result of the U.S. government decision in December 2015 to lift the

country's 40-year ban on crude oil exports, the Port of Corpus Christi has

switched from being an oil import port to an oil export port. 

     In terms of overall ship and barge activity, grand total volume for the

port was 474 total vessels for June 2017 versus 417 total vessels in June 2016

and 624 total vessels in June 2015, with last year's drop reflective of the

sharp move lower in crude prices. 

     In 2017, crude exports have picked up in  as oil prices have stabilized and

the Cactus Pipeline from the Permian basin to Corpus Christi came on line at the

end of 2016/early 2017 and now handles 300,000 barrels per day.

     "That's added a considerable volume of crude every day that we didn't have

last year/early this year," LaRue said. 

     Monthly tonnage numbers in June were up 6.5% over June 2016 and

year-to-date tonnage was up 12.8% over the same time 2016. The increase was

driven by stepped-up exports of crude oil and bulk grain. 

     Wind energy components remain a lesser known, but increasingly important,

cargo at the Port of Corpus Christi, he said.

     "This year," demand for wind energy components "has been very strong. We're

probably up 25%-28% over last year, which was a good year," LaRue said.

     Wind farms continue to be constructed, with no sign of a decline in

interest, he said.

     "Texas is the leading state in the country for wind energy - which

surprises everyone who thinks it's California," LaRue said. 

     Last month, several ports noted a big spike in "empties" or empty container

ships that need to be returned to original  ports. 

     The Port of Los Angeles reported a 20% increase in empties in July and the

Port of Long Beach noted that "the recent wave of imports helped push empty

containers 27.7% higher to 215,394 TEUs." 

     Other than two months in July and August 2015, the last time the Port of

Long Beach had empties over 200,000 on a sustained basis was in 2006, for four

months from May to November.

     As a reminder, the U.S. unemployment rate hit a low of 4.4% in October 2006

and December 2006 before the start of the U.S. financial crisis. 

     Port of Long Beach's Kenagy observed "that was a time of surging demand for

imports - just prior to the recession. 2006 and 2007 were very high trade years

for us."

     The monthly Global Port Tracker report, released August 9, by the National

Retail Federation and Hackett Associates, noted that August imports are forecast

at 1.75 million TEUs, which would be 2.1% above last year. 

     "That would be the highest monthly volume recorded since NRF began tracking

imports in 2000, topping the 1.73 million TEU seen in March 2015," the NRF said.

     "The 1.7 million-plus numbers seen in May and July and now expected for

August and October would represent four of the six busiest months in the

report's history," the report added.

     The NRF forecasts that 2017 retail sales - excluding automobiles, gasoline

and restaurants - should increase by 3.7% to 4.2% compared to 2016, "driven by

job and income growth coupled with low debt."

     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. 

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

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