Port Watch-Down a Little; Up a Lot
There is supposed to be a chill in the air. Cries of trade unfairness howl across the borders. Global economic players trade verbal jabs threatening to out-punish the world’s great consumer. Less sorghum and coal to be exported; fewer cars and steel to be imported. Where does it all end? Last month, it really did not seem to matter for Texas ports since it nearly equaled April’s arrival numbers. In fact, with five months under 2018’s belt, this year is shaping up to be a near-record one. Thus far, 2018 is outperforming 2017 by well over 4%. Hence, every port – save one – is enjoying positive numbers on a year-to-date basis and all but three of Texas’ eight major ports posted monthly gains.
Houston’s monthly performance mirrored that of Freeport’s year-to-date percentage climb (i.e., 0.5%). This was enough to keep the port firmly above 2017’s arrival count by 3.4%. In the BTU arena, LPG arrivals are distancing last year’s numbers by over 10% after a monthly 1% uptick and tankers are benefiting from the demand for American crude overseas with a 14.5% monthly gain. Interestingly, there were still a few substantial percentage declines for the month. Namely, bulkers – off by over 4% for the month and over 7% for the year; chemical tankers – down by over 12% month-to-month but still outpacing 2017 by over 9%; general cargo – slumped by 12% during the course of the last month and lags last year by 1%; and ocean-going tows – fell over 14% in the last month and behind last year’s count by nearly 11%. Conversely, container arrivals saw their highest number for the year resulting in a 5% monthly climb as did car carriers with a 55% leap. At this juncture, it does not appear the threat of tariffs is slowing the movement of cars and containers in and out of the port.
Texas City is also poised to capitalize on the export of crude bonanza with its first partial loading of a VLCC with black gold this month. Unfortunately, that news could not take the sting out of a monthly arrival plunge of 20%; however, that came on the heels of a record month as reflected in the fact that Texas City is outshining last year’s arrival count by 6%. A few miles to the south, Galveston also put up negative arrivals for the month. Fortunately, the 9% monthly wane paled in comparison to the fact that 17% more vessels have arrived in the port year-to-date wise. The only other port that found itself “in the red” over the last month was Sabine. Despite a 4.4% decrease in arrivals, Sabine is enjoying a rather robust rebound with 2018 outperforming 2017 by nearly 16% mostly due to its firming petrochemical export base.
On the opposite side of the coastline, Brownsville’s monthly vessel count more than doubled with an arrival record of 38. This dramatic jump propelled the port squarely in positive territory with 13.5% more arrivals on a year-to-date basis. The torrid pace was fueled in no small part by its very strong trading relationship with northern Mexico. Granted, there may have been some “front-loading” of commerce in anticipation of new tariffs. The similarly sized port of Port Lavaca/Point Comfort may not have led the constellation of Texas ports for the month with its second place finish of 13.6% but it is certainly outdistancing its brethren with its nearly 30% higher vessel count year-over-year. Freeport, on the other hand, is eking out a slightly better arrival count this year on the heels of a 9% monthly rise in its vessel count. Granted, a 0.5% lead over its previous year is commendable in the wake of 2017’s record numbers.
Corpus Christi – a port that is coming off on a good year. In that regard, a slight downturn would not be unusual; however, after logging a 3% monthly gain in arrivals, the port has had 12% fewer arrivals compared to last year. Some of the fall off is due to larger tankers exporting greater volumes of cargo and the fact that local refineries are producing less petcoke for export as sweeter barrels flow in from the Permian basin via pipeline. Yet, there are some dramatic decreases in agricultural exports as evidenced by the precipitous drop in the export of sorghum to China. Nevertheless, steel continues to be imported for the miles of pipeline being laid from the shale gas fields into the port. Moreover, the flow of barite through the port will invariably ramp up as more fracking unfolds in the Permian and Eagleford plays. Ultimately, Corpus Christi is poised to become a key player.
Perhaps the protectionist posturing will manifest itself in more concrete actions on the part of our nation’s various trading partners that may have the potential of markedly eroding today’s gains. Maybe those same anti-free trade measures will further bolster the performance of the U.S. economy. After all, in the beginning of the last century another Republican White House resident observed, “Our past experience shows that great prosperity in this country has always come under a protective tariff.” Albeit, times have changed since Theodore Roosevelt held office. Nonetheless, one must be mindful of the consequences of a flood of foreign products given that history has a habit of repeating itself. This was poignantly reflected in a lament by the London Daily Mail the year prior to T. Roosevelt’s assumption of the Presidency in the following passage, “We have lost to the American manufacturer electrical machinery, locomotives, steel rails, sugar-producing and agricultural machinery, and latterly even stationary engines, the pride and backbone of the British engineering industry.”
- Date July 3, 2018
- Tags 2018 June