Port Watch – Election Year Economics

By Tom Marian, Buffalo Marine Service, Inc.

The election year primary season is upon us. Thus, with no incumbent seeking the oval office on the slate, it portends to be a long drawn-out affair replete with entertaining sounds bites from wealth redistribution to securing borders. Undoubtedly, it will be a tumultuous slog leading up to the party conventions where a standard bearer will be anointed. Most likely, the candidates will focus on the state of the economy and the imperative of creating jobs that bolster a waning middle class given the rather tepid growth that is confronting the nation.

Tepid, indeed, was the start of the election year as the inaugural month of 2016 tallied over 3% fewer vessel arrivals than the preceding year for the state’s eight coastal marine gateways. Fortunately, all was not “in the red” as there were some very positive outliers on both a monthly and year-to-date basis. In particular, the two smallest ports on the western end of the coast, Brownsville and Port Lavaca, experienced positive gains across the board. Brownsville’s monthly jump of 22% and 8% increase against last year’s opening month was quite impressive; however, it paled in comparison to Port Lavaca’s 47% across-the-board leap. Port Lavaca’s torrid start-of-the-year arrival numbers were driven by a robust export of chemicals and pressurized cargoes.

2016 JAN GHPB Vessel Movement Texas
Corpus Christi also fared well on a monthly basis chalking up 2% more arrivals. Yet, its 2016 began with more than 14% fewer arrivals than a year ago due to the continued faltering demand for the movement of crude through the port and the softening imports. The port of Freeport’s January matched that of the prior year on the vessel arrival front but, given that Freeport’s first quarter was so much weaker than its final quarter, it pegged a 13% monthly fall. The only port that put up worse numbers than Freeport for the month was Galveston which plummeted more than 17%. Worse yet, its January 2016 arrival count was significantly below every month in 2015 and almost 30% under last year’s first month of the year. A large part of this collapse is due to the fact that the bottom has fallen out of the Gulf of Mexico exploration and production business.

The Port of Texas City’s start of the year was not as abysmal as Galveston but, it too, saw fewer arrivals in January than any other month in 2015. Albeit there were 2% fewer arrivals on a year-to-date basis but from a monthly perspective arrivals fell by over 6%. Sabine, on the other hand, posted very respectable beginning-of-the-year numbers to the tune of 17% more. Granted, the arrival count for the beginning of the year was greater than 10% below the last month of 2015. Yet, the overall activity for the port remains cautiously optimistic given its LPG and chemical export capacity.

The port of Houston managed to post a modest monthly gain of 7/10th of one percent but the arrival tally placed it 4% below that of last January. In some instances, the gains where a matter of perspective. Thus, general cargo had the greatest monthly gain of all vessel categories with 26%. Nonetheless, those arrival numbers were still 24% less than last year. Bulkers saw a rather modest rise of 1% over the course of the last month. Yet, this category was also 7% behind on a year-to-date basis. The port saw 15% fewer container ships in January as compared to December and were equally down by 14% on an annualized basis. Even the larger container ships could not offsetthe drop in ship numbers in terms of total container movements as 7% fewer containers moved across the terminals. Car carriers were also off by two (i.e., 20%) for the month; however, one more vessel of this type called upon the port in 2016 than in 2015. Overall, the import of cars has remained steady over the last several months.

2016 JAN GHPB Vessel Movement Database
Petrochemical-wise – with the exception of chemical tankers – vessels dedicated to this category held their own. Tankers began 2016 with the same number of arrivals as it kicked off 2015 but tankers ticked up 8% over the last month. LPG vessels had a commendable 12% influx of arrivals for the month and an even more respectable 39% leap on a January-to-January comparison. Finally, as previously mentioned, chemical tanker arrivals lapsed by 13% for the month. There was a bit of a consolation for this category as it crept up 2% compared to last year.

Lurking beneath the less-than-positive start to the new year was an extremely positive ship channel tow movement count that eclipsed by far the record month of July 2015. A total of 12,710 tows passed through or transited into the Houston Ship Channel in January – a number that exceeded the preceding month by 12% and preceding January by 6%. There are a number of theories for this vast number – unprecedented record high water on the Mississippi diverted commerce to the Intracoastal Waterway; a substantial number of tows culled from the movement of crude seeking work in more traditional markets; or a sign that domestic commerce is holding its own despite reduced international trade. One thing is for certain, supply is outstripping demand as daily rates hunt for a bottom and some semblance of market equilibrium. That seems to be one thing the various presidential hopefuls are seeking from a disenchanted electorate – a sense of balance in dealing with the myriad of issues that impact our future.

  • Date March 3, 2016
  • Tags March 2016