Port Watch-Boom or Bust?

Tom Marian
Buffalo Marine Service, Inc.

The mid-term rhetoric has subsided. Now that the results are in, it appears what was once red is blue and, arguably, what was left may now be right. More importantly, how will the new majority’s disposition towards trade, taxes, and entitlements impact the current economic run? Will it create enough uncertainty to slacken the current pace of economic growth or will the pro-business bent of the Trump Administration eclipse those worries? Needless to say, the first month of the year’s final quarter posted yet another impressive showing. In addition to an overall monthly percentage increase of over 7%, three of the eight ports registered their highest vessel count for the year. All this bodes quite well for the majority of the ports which are poised to eclipse last year’s vessel arrival numbers.

This month’s winner on the positive-percentage front is the port of Port Lavaca/Point Comfort. While it was a tad below its best month for the year, it is outpacing 2017’s arrival count by 19% after recording a 47% monthly leap. Clearly, the port’s foray into the petrochemical market is paying vast dividends for this compact Texas export gateway. The port of Sabine also posted double-digit percentage gains over the last month and for the year. In fact, October witnessed the greatest number of vessel arrivals for the year which translated to a 16% monthly climb and a year-to-date improvement of nearly 17%. In short, things are booming at the state’s easternmost port with ever-increasing volumes of crude, LNG and LPG exports. The port of Freeport was also on a maritime commercial tear last month as, it too, logged its highest arrival account. The most recent 13% monthly hike reflected its best monthly showing and eased the port further into the positive for the year at just over 2%. This compact yet robust port is also firing on all cylinders at it attracts greater volumes of trade.

Brownsville is similarly situated in terms of outpacing 2017’s arrival totals this year – despite 5 consecutive monthly declines. Currently, it stands 7% ahead of last year’s pace following the most recent arrival decrease of 8%. This certainly underscores that Brownsville continues to capitalize on its proximity to Mexico. On the other hand, Brownsville’s neighboring Texas port of Corpus Christi recorded its highest monthly count for the year with over 8% more arrivals in the last month. Unfortunately, the port remains stuck in the red for the year by over 7%. Granted, as mentioned before, its infrastructure is positioned to capitalize on the growing export of crude and petrochemicals; however, dredging and other construction delays have prevented the arrival count from eclipsing that of 2017. Conversely, Galveston’s arrival yield was its lowest for the year; a bit of a bust compared to its Lone Star counterparts. Irrespective of its 4% monthly fall, it remains to the good for the year to the tune of 8% and change. The nearby port of Texas City – which has been struggling to break free from successive years of trade declines – experienced a somewhat sluggish month with 2% fewer vessels calling upon the port in the last month. Thankfully, it continues to outshine 2017’s arrival stats by over 4%. Like the bulk of its Texas port counterparts, it has benefited from the export binge of petrochemicals.

With so much oil being produced by the United States in general and Texas in particular, it stands to reason that the waterways that feed the Bayou City would be bristling with vessels. To date, 7100 deep draft arrivals have done just that; surpassing last year’s activity by 3.2% and the previous month’s by 5.6%. Indeed, a record number of cars and containers continue to surge into the port of Houston. While the car carrier count was flat for the month, it exceeds the prior year by 23%. Likewise, 5% more ships offloaded tens of thousands of TEUs over the past month pushing up 2018’s container ship calls by 3% over the past year. On the “bust” side of the ledger, LPG traffic logged its fewest vessels for the year but 12% more LPG vessels have plied the ship channel waters as compared to last year even after factoring in the most recent monthly stumble of nearly 10%. Bulkers and general cargo vessels are the only two categories that remain off for both the year and the month. Specifically, bulk carriers had the worst monthly and year-to-date performance of all ship categories – a 24% plunge and 15.6% respectively. General cargo fared a tad better but still put up negative numbers; 4% down for the month and nearly 3% off year-to-date wise. Both of these vessel categories have suffered somewhat from the tariff tiff and project construction delays exacerbated by bottlenecks in the shale gas fields.

That aside, there was no shortage of energy moving through Houston’s ship channel with 15% more tankers navigating the waterways over the last month. This category of vessels remains 5.5% ahead of last year’s arrival tally. Chemical tankers chalked up its 3rd best monthly arrival count for the year which was reflected in a 9% increase. The number of these vessels transiting amongst the dozens of chemical loading docks remains an impressive 11.4% ahead of 2017’s arrival figures. Yet, another sign that the export of bulk manufacturing cargoes remains bullish over the foreseeable future. This was also corroborated by the record number of ocean-going tows that arrived in Houston – 35% more over the last month to be more precise. Nevertheless, despite this bounty, this particular category has yet to break into positive territory for the year. Perhaps what is even more flummoxing is the fact that inland tow movements across the region has recorded back-to-back lows with October finding a new bottom. Then again, this may be nothing more than a breather for these denizens of the ditch (i.e., Intracoastal waterway) given that it has outdistanced 2017’s transits by over 9%. Economically, there are no indications that this sector of the market is headed for bearish territory.

Cumulatively, times are rosy in the world of maritime commerce. The majority of the ports are offloading record amounts of commodities to cater to the growing number of consumers moving into the region while simultaneously exporting a raft of petrochemicals to the rest of the world. Granted, there are signs of inefficiencies that are preventing even greater amounts of exports to flow from the ports of Texas; however, this may become immaterial as the price of oil wanders into fifty-dollar-a-barrel territory. It could also be a precursor of things to come as the consumer’s appetite to spend is dampened by the realities of inflation. Will the boom continue or is a bust imminent? No need to worry about that now; the holidays are upon us!!

 

  • Date December 5, 2018
  • Tags 2018 Nov