Port Watch

SHADOW SEEN?

Tom Marian
Buffalo Marine Service, Inc.

2018 is rapidly drifting further from the calendar’s rear view mirror undeterred by the nation’s longest government partial shut down in history. While economists attempt to sort through the disruptions to the country’s economy by that dislocating event, anxious legislators caucus behind closed doors to avoid another shutdown. Meanwhile, as the Midwest and Northeast shiver through a record-chilling polar vortex, Punxsutawney Phil hesitatingly emerges from his winter lair to bring hope or despair to those yearning for an early spring thaw. Was Phil spooked by his shadow or did he send a sign that winter will fade sooner rather than later? Candidly, does the shadow ritual really predict anything about winter’s length? Perhaps not, but a point of datum is better than none at all. In light of that, what does a year of solid economic growth throughout the constellation of Texas ports in 2018 signal about 2019?

A strong finish to the year solidified 2018’s performance by outperforming that of 2017. Every port – save Sabine – saw monthly vessel arrival upticks. Ironically, Sabine lead the state’s ports with the highest percentage gain of the year at over 13%; despite December’s 8.2% drop. The ports served by the Sabine pilots have experienced robust activity throughout the year as greater volumes of crude, chemicals and LNG flow to ports beyond the North American shores. On the other end of the vessel arrival spectrum, the Port of Corpus Christi was the sole Texas port to not post a year-over-year positive vessel count with 170 fewer arrivals calling upon the port in 2018. One should not read too much into this nearly 8% decline, given that the port’s terminal growth and substantial dredging initiative will markedly increase its export tonnage in the years to come.

The Port of Brownsville experienced the greatest vessel arrival percentage jump for the month of December at nearly 32%. This secured it gains over 2017 to the tune of 5%. The Port of Galveston also logged a solid monthly gain of 6.5% after seeing its highest vessel count for the year. Its most recent 6.4% monthly rise was under girded by a strong performance in the cruise ship arena. Freeport’s monthly gains were not as strong as Galveston’s; however, the nearly 4% increase was just enough to push the port into the year-over-year gain column by one-half of one percent. The port continues to build upon its past successes by luring more cargo into its relatively compact footprint. To the northeast, Texas City has turned a corner as it also benefits from the bounty of relatively inexpensive chemical exports. After a year of somewhat soft activity in 2017, 2018 exceeded the previous year by 3.6%. Its most recent monthly tally of 6.1% above the previous month ensured it would end the year on a high note.

Houston also ended a year filled with tariff uncertainties on a positive note. Its final month climbed 3.2% above the prior month for a final vessel arrival count that was nearly 2% above 2017’s numbers. Perhaps what was most impressive about the overall performance is that the total gains were not impacted by the marked declines in the movement of bulk and general cargo vessels. These vessels typically comprise nearly 20% of the total annual arrivals. While both categories ended on a strong note for the year – bulker arrivals up 24% and general cargo count 7% higher – they were down for the year by 13.6% and 3.7% respectively. This trend was similar to 2017’s performance and reflects a lack of frenzied activity on the new project front as more efficient practices are implemented in the Permian shale-gas fields. Containers and cars, on the other hand, have been moving in record amounts. Granted, the continued post-Harvey rebuilding – combined with an ever-growing population which is being drawn to the region by enormous job opportunities – drives much of this. The possibility that lagging growth overseas and a dwindling consumer confidence at home may have the potential to create headwinds that stall this sort of demand; however, this possibility is rather remote as demand for cheap BTUs remains unabated.

On the fossil fuel front, all is sanguine. Tankers brought crude to and from Houston’s burgeoning storage terminals at a rate nearly 3% above 2017’s arrival count. This was on the heels of a 10% monthly wane and a vessel count that failed to reach 200 for the first time in 2018. Chemical tankers were up 10% on a year-over-year basis following December’s 6% monthly rise. LPG arrivals were off almost 4% for the month. Nonetheless, these export darlings outpaced 2017’s arrival numbers by over 10%. Perhaps the only exception to these upward trends were the ocean-going barges which are typically laden with petrochemical cargoes. The 10% year-over-year decline reflects the reality of a greater number of pipelines moving cargoes from region to region – a less expensive option than waterborne transportation. Conversely, the inland tow activity has been busy indeed as evidenced by over 7% more tows transiting to or past Houston over the past year. In fact, December’s 5.6% monthly increase pushed the annual tow count above 144,000 for an average of more than 12,000 tows per month in 2018.

Maritime commercial activity across Texas ports continues to play a substantial role in the economic well being of the state, the region and the country, as a whole, as it brings in hundreds of billions of dollars of revenue. In fact, its dominance has eclipsed other modes of transportation and bolstered revenue streams of a variety of sectors in the economy. Yet, will the shadow of diminished activity overseas prevent 2019 from building on 2018’s gains or, is the bounty of nearby BTUs enough to offset such things? While it is hard to tell this early in the year, spring in Texas will be here well before Punxsutawney Phil awakens from his winter slumber.

  • Date March 19, 2019
  • Tags 2019 February