Port Watch – Still Somewhat Murky

By Tom Marian, Buffalo Marine Service, Inc.

Yes – the sky has fallen and the vast expanse of Harris County that eventually drains into the Houston Ship Channel has transformed sloughs, swales, canals, bayous anVopak-GHPB_Ad-PRESS-012115d anything else that resembles a ditch into engorged, deep brown veins. The spring gulley washers are not unusual but, unfortunately, there are times when too much rain comes too quickly. That certainly was not the case with the pace of vessel arrivals during the month of March. It is generally assumed that the final month of the first quarter will exceed the shortest month of the year; however, whether that increase is above the percentage of the greater number of days in March or above that of January’s can foretell – on a limited basis – how the current year will stack up against the prior one. If one views the arrival totals through that lens, there is some hope that there may be limited growth in 2016 despite the fact that Texas’ global vessel arrivals remains 2.5% behind 2015’s first quarter numbers.

2016 MAR GHPB Vessel Movement Database TexasCumulatively, monthly arrivals jumped over 7% throughout the state’s ports. More impressively, the majority of the ports chalked up double-digit monthly gains and only one – Port Lavaca – saw an arrival decrease. It should not come as any surprise that Brownsville posted the largest percentage monthly increase – 35% - given the rather low arrival count during the previous month. The subdued activity in the region’s shale gas fields has not entirely taken the wind out of the Port’s economic sails since it is outpacing last year’s arrival activity by 4%. The next biggest improvement for the month unfolded in Galveston with a 19% leap; however, this robust climb still left a 26% deficit vis-à-vis 2015’s first quarter. In fact, 2015’s average monthly arrival tally was over 80 – a number well above this year’s arrival average of 66. March’s third place finish – percentage wise – was landed by Texas City with an 18% monthly rise. Like Galveston, this was not enough to pull the port into positive territory on a year-to-date basis. Nonetheless, despite the 3% annualized slide, Texas City registered a triple-digit arrival number for the first time since last August.

A few hours steam to the southwest, Port Freeport is one of the few ports to post positive results for both the month and the first quarter. The rather impressive 15.5% monthly climb kept the port firmly in the black on a year-to-date basis. It’s 2-plus percent aggregate gain, as measured against last year, reflects trade stability for this GIS-ad-5x7.5rather compact port. The port of Sabine’s monthly percentage positive numbers nearly mirrored those from a year-to-date perspective at roughly 6%. Granted, the first quarter 2016 numbers are well below that of 2015’s final quarter but LPG exports should keep things fairly stable for the year. Conversely, the port of Corpus Christi - even in the wake of a 6.5% monthly rise - remains mired in negative territory relative to 2015 by over 7%. This is further evidence that the petroleum exploration business is contracting more than it is expanding.

The Port of Houston is also showing some signs of sluggishness as 2016 enters its second quarter. While the port managed a healthy 4% gain for the month, it lags 1.6% behind the first three months of 2015 and has yet to hit the 700 vessel arrival mark. To put things into perspective, last year’s monthly average was 698 but, thus far, the monthly arrival average sits at 671.

Mind you, it is inevitable that the numbers will surge in the second quarter as part of the late spring-early summer trade pattern. To date, the majority of the vessel categories are well behind the previous year’s haul. Bulk carriers which were off in 2015 by nearly 14% continue to slide into negative territory after a 1% monthly drop. Thus far, 2016’s first quarter is 12% behind that of last year’s. General Cargo redeemed itself this month with a 18.5% rise. Nevertheless, in the wake of last year’s weak 11% contraction, this project-cargo centric play is yet another 17% off with respect to last year’s arrivals. Chemical tankers had an impressive rally in March with a 25% uptick. Yet, it continues to languish with a 12% year-to-date deficit. In fact, the raw count for March is more than 10 arrivals below 2015’s monthly average. The opposite is true for LPG vessel arrivals which have enjoyed a resurgence over the past two years. This vessel category is enjoying a rather torrid first quarter compared to last year. Thus far, it is outpacing 2015 by nearly 30% - a genuinely superb result considering last month’s 1.5% decline. Tankers also appear to be making a comeback albeit on a year-to-date basis as there were over 7% more arrivals for the first three months of 2016 after factoring the most recent 2% monthly wane. Ships transporting cars and containers had positive arrival tallies over the last month – 11% and 2.7% respectively. That is where the similarity ends given that car carrier arrivals are in the black by 8% and container vessels are 9% in the red on a quarter-to-quarter comparison.

2016 MAR GHPB Vessel Movement Database Houston
There you have it, the ups and downs of the first three months of the election year. Commodity prices are firming to a certain degree and demand both domestically and internationally is doing its best to stabilize in positive territory. Unfortunately, thus far, there is not enough of the upside to more than compensate for the downside. In essence, things are a bit turbid and less than clear. Hopefully, when the downpours of spring pass and the swollen streams dump their muddy waters into the vastness of the Gulf of Mexico the murk will give way to a clearer picture.

  • Date May 10, 2016
  • Tags May 2016