Port Watch – Trifecta for Three; Tepidity for the Rest

By Tom Marian, Buffalo Marine Service, Inc.

There are times in the world of maritime commerce when a sluggish spring is a warm-up for a robust summer season. In other years, solid trade for an “anchor port” - such as Houston - may offset declines in an adjacent port or two. Regardless of the pattern, cumulative port activity is a consistent weather vane of what is unfolding beyond the wharf both regionally and nationally. In 2016, the national slow-growth picture is being mirrored from Brownsville to Sabine as reflected in back-to-back monthly arrival decreases and a wane of nearly 5% on a year-to-date basis. Optically, activity on the inland tow movement front was impressive over the last month with a 9% rise. However, there are indications that many of the tows traversing across the Houston Ship Channel are those that have been displaced from the inland river routes, now that the flow of “fracked” barrels has been dramatically curtailed.

With another month under its belt, only two ports earned bragging rights for registering monthly arrival gains and year-to-date positive arrival percentages. For 2016, Brownsville, like Sabine, recorded its third consecutive monthly increase. Granted, Sabine’s annualized percentage gains were three times that of Brownsville at 4.6% compared to 1.5%; however, both have benefited from the export of energy. Sabine, in particular, is riding the LPG export wave which contributed substantially to its nearly 5% monthly climb.

TexasPorts
On the other hand, things are flagging rather badly for the Port of Galveston as it logged back-to-back monthly ebbs with the most recent one at over 16%. In fact, the month of May saw the fewest number of vessel arrivals for the year and, worse yet, the vessel count at Galveston’s public wharves was the lowest in 18 months. Thus far, arrival percentages are nearly 29% off of 2015’s year-to-date figures – a situation that is primarily driven by the abysmal picture in the Gulf of Mexico oil exploration market. Corpus Christi also experienced back-to-back monthly dips vis-à-vis the vessel arrival count. Fortunately, the most recent monthly results were only 3.6% off of the prior month. Nonetheless, the languishing crude production market has played a significant role in its descent by over 13% from 2015’s arrival performance.

Focusing back at the eastern end of the state, the port of Freeport occupied the unenviable position of tallying the worst monthly percentage decline for the month at over 20%. Fortunately, the port is living off of its very strong first quarter gains as it remains nearly 8% above that of the previous year. Some of this is attributable to greater trade activity at its public cargo docks as a greater number of vessels are attracted to a less congested port. Texas City, on the other hand, remains in the red for the year to the tune of 7%. Its year-to-date lackluster arrival numbers are driven by a retooling that currently entails an idle terminal and the flow of domestic barBuffalo 2016rels into the regional refinery pipelines rather than across the dock. Yet, there are several other forces that are converging on this rather compact petrochemical port that are telling. Storage of barrels is more static, export of crude is climbing, and overseas demand for distillates and, in some instances chemicals, is softening. Overall, unless there is a solid “ramp up” of international manufacturing activity, it remains unlikely that Texas City will climb out of its vessel arrival deficit.

With its third consecutive monthly arrival gain, Houston is trying to climb out of its year-to-date deficit that currently stands at over 3% - a somewhat poor performance in the wake of its first month of the year at over 700 arrivals.

To a certain degree, a 2% vessel arrival jump combined with larger container ships transporting a greater number of containers, underestimates the true nature of gains on the trade front. Having said that, strategic consumables such as general cargo and bulk commodities that reflect the state of longer term capital projects are at their nadir with no real recovery in sight. Thus, general cargo logged its biggest monthly drop of the year at 23%; further dropping its year-to-date percentages to over 18%. Likewise, bulker arrivals fell by 5% - remaining solidly in the red at 21.5% for the year. On a much more positive note, car carrier traffic saw pronounced gains for the month at 33% which bolstered this category’s year-to-date percentage gains to just shy 12%. Conversely, container ship arrivals fell 4% for the month and remains 9% below 2015’s arrival count.

As in the past, two categories that posted their best monthly numbers for the year were in the petrochemical sector. Specifically, chemical tankers were up by 3% and tankers were nearly 6% above last month’s count. Interestingly, the export of chemicals is off by 8% for the year reflecting sluggishness in the global manufacturing arena. Yet, the tanker count continues to outpace 2015’s numbers by 3%. While the nascent export of crude has “juiced” the export numbers despite a waning demand for distillates, unless there is a solid recovery in the oil markets, it is unlikely 2016 will finish ahead of 2015 for this particular activity. This is certainly not the case for LPG vessel arrivals which are enjoying a very favorable export market. The May count for LPG movements tracked 23% ahead of April and is a very healthy 23% higher than 2015’s numbers.

Houston
Ultimately, there were some positive signs of growth despite an overall negative trend. Yet, the continued shedding of jobs, consolidation of businesses in the petrochemical realm and uncertainty in the global market place lurks. To that end, while Houston continues to serve as the major maritime gateway for Texas, an expanded Panama Canal does not necessarily guarantee the robust growth that preexisted the free fall of the price of a barrel of oil. Perhaps – at this juncture - the regional economy is merely regrouping before gathering steam for the next spate of growth. Whether that is the case or not, three months of gains for three ports cannot prevent where the global economy wants to go.

  • Date July 18, 2016
  • Tags July 2016