Port Watch – Debating Dueling Datum
The quadrennial rite of passage is upon us – the presidential debates. Undoubtedly, the focus of this prime time event will be the economy. One side will trumpet record household worth, unprecedented personal income growth over the last several months, and low inflation. The opposing view will focus on the country’s paltry GDP growth, industrial production declines, and an economy stuck in neutral despite the Federal Reserve’s easy money carnival. Whether one is attempting to craft a silk purse out of a sow’s ear or argue that the middle class prosperity is nothing more than a Potemkin village, it eventually becomes a matter of perspective and with whom do you affiliate – Locke or Hobbes. In land of maritime trade down yonder in Texas, August was a bit of both.
Macrospectively, the overall trade picture leading up to the peak trade season was down for the month and further down for the year. Nonetheless, on a port-by-port basis the majority were up for the month with a few ports posting their highest arrival numbers for the year. In other instances, such as Freeport, the monthly gain kept the port in positive territory for the year. While this month’s gain was a tad above 1%, its year-to-date arrival numbers are up by more than 3%; thanks to additional vehicles and general cargo moves. Unfortunately, Freeport’s gain is sometimes Galveston’s loss as in the case of vehicle imports. The gateway to the bay suffered its first monthly downturn after solid gains in June and July. Thus, it registered a 7% monthly decline and is currently 19% below last year’s arrival totals. The woes of the oil patch have not been kind to this port in 2016.
With the price of oil at nearly the same level today as it was a year ago, the Port of Texas City has experienced a relative flurry of activity on the tanker front. It recorded its highest monthly arrival number for the year which translated to a 6% climb; however, the port remains down by that same number on a year-to-date basis - primarily due to the movement of crude into its refinery infrastructure via pipeline. Conversely, the port of Sabine experienced an arrival nadir with its third-consecutive monthly fall at 5.5%. This was enough to finally pull the port into negative year-to-date territory by 1.5% - another victim of the soft energy market.
At the opposite end of the state, things were a bit more sanguine as both Corpus Christi and Brownsville welcomed a record number of vessels for the year. Remarkably, perhaps due to its small size, Brownsville has weathered the malaise of the oil market quite well as it outpaces 2015’s arrivals by over 3%, no doubt, aided by a 15% monthly gain. Corpus Christi, on the other hand, is 13% behind the previous year’s arrivals. Obviously, a 2% monthly gain cannot wipe out double-digit losses but this may be nascent evidence that the ever-increasing production efficiencies in the Permian and Eagle Ford basins are rejuvenating exports from this port.
In light of all of the above monthly arrival increases, why was Texas maritime commerce off for the month? One word – Houston – which registered its biggest monthly fall of the year at 3.9%. Surprisingly, this rather substantial drop did not change the year-to-date number which remains down by 1.9%. Container ships certainly did not play a role in this number since that vessel count was up by 2.5% but is still off last year’s vessel count by 6%. Of course, the container count is the real proof in the pudding - that number fell 4% for the month and 1% for the year. Both loaded container exports and imports are down for the year, 5% and 3% respectively. The one sliver of silver lining was the fact that loaded containers on the export side of the ledger were up 1%. What of the impact of the Hanjin bankruptcy? Given that a mere 3% of the handled cargo was from this line, its impact has been somewhat muted. Mind you, if you are awaiting a Hanjin container, it will cost you an extra $225 to secure its delivery – an unanticipated additional cost.
When one drills down into the composition of Houston’s August arrival numbers, it is a world of contrasts. Bulk carrier arrivals jumped over 28% for the month with an arrival count that bested its previous monthly high water mark by over 14%. The same tale could not be told for general cargo traffic which had one of its worst months following a 15% fall. Both categories remain well behind last year’s performance by 10% and 17% respectively. Worst yet, there is no indication that project cargo will gain traction in the foreseeable future given the uncertainty in the energy production markets.
Predictably, energy was a mixed bag of results for the month. Chemical tanker arrivals hit their zenith for the year with an impressive 13% rise. This takes some of the sting out of this category’s lackluster year-to-date performance which lags by 7%. LPG movements fell 3% but viewed through the year-to-date lens are a healthy 9% ahead of last year. Petroleum tankers took the biggest hit this month after a 14.5% plunge. Fortunately, exports have kept this category “in the black” with a nearly 5% year-to-date gain. Overall, chemical exports are ramping up with the commissioning of the new facilities throughout the Houston Ship Channel; the export of distillates is softening as demand in the hemisphere languishes; and export of LPG continues to hold its own given the abundance of inexpensive natural gas.
There you have it, a monthly snapshot of positives mixed with negatives in an environment that appears to be “neither improving nor deteriorating.” What was it that Goldilocks exclaimed, “not too hot and not too cold”? Yet, something just does not feel right this far into the year when all should be robust on the consumption front after so many years of a promised economic breakout. If you examine things a bit more closely, you will see a pronounced sluggishness in the world of inland barges. Despite the fact that the Mississippi River has been somewhat tame and the Gulf hurricane season has been extraordinarily quiet, the tow count is off by 2% for the month and 4% for the year. It could be a trivial piece of datum that means nothing or a foreboding of what may be an even flatter 2017. It just depends on how you want to spin it.
- Date October 12, 2016
- Tags October 2016