A routed light field artillery officer intent on redeeming himself via prisoner negotiations; a borrowed melody from the high brow Anacreontic society; a patriotic doctor that mislead a conquering British General who was subsequently killed by an American sniper; an extraordinary hurricane that delayed the redcoat attack on the Port of Baltimore; and the deployment of a new weapon in the War of 1812, prompted the creative juices of Francis Scott Key to pen “The Defense of Fort McHenry” in September 1814. It took another 119 years and the U.S. military’s official adoption of the Star Spangled Banner as its anthem before the aggressive lobbying of a Maryland congressman prompted Congress to adopt the popular and patriotic tune as the official national anthem of the United States.
Thus, as the first half of 2020 gave way to our nation’s annual celebration of its independence, Old Glory was proudly unfurled on many a porch from coast to coast. Granted, the 244th birthday of the country’s Declaration of Independence was rather subdued throughout the nation. Parades, firework displays, and community barbeques were cancelled in most communities. This subdued atmosphere mirrored what has been transpiring throughout Texas over the past month despite a rather impressive first quarter. Overall, the state’s combined arrival numbers are off by 2.6% when stacked against last year’s count. June’s nearly 4% drop certainly did not help matters. Yet, it is not unusual for the vessel counts to wane during the summer months. Could that be the reason a majority of the ports registered monthly declines?
In the case of Brownsville, an arrival drop was predictable coming off of May’s 2020 high. As such, June was off by roughly 28% but the port remains to the good by just shy 31%. Trade with our southern neighbor remains rather firm for the year, and Brownsville is certainly benefiting from its close proximity to Mexico. The adjacent port of Corpus Christi also experienced double digit declines for the month. June’s arrival count was the lowest for the year and was 17.5% below that of the previous month. This was the third consecutive month of fewer arrivals. The good news is that, thus far, the port remains ahead of last year’s pace by nearly 14%. The why of this most recent nadir has less to do with the summer doldrums and more to do with the dearth of demand for refined products in this era of virus.
Continuing up the Lone Star coast, Freeport joined the double-digit-monthly-loss club; albeit, its months of plenty in 2020 have more than offset the most recent 13% lull as it remains 19% above that of 2019’s first six months. No doubt, the summer slumber was at work in June but weakening LNG and petrochemical demand have played a role in the softening numbers. A hop, skip and a jump away, the Port of Galveston was bound to catch a break after May’s frighteningly low arrival tally. Unfortunately, a 22.6% monthly jump could not pull the port out of its 2020 malaise. It currently stands over 15% off of last year’s numbers. Cruise ship ports throughout the nation are no longer the envy of those that move commodities, given that 2020 is poised to be a complete write off for the cruise ship industry.
Several miles to the north, the Port of Texas City finally caught a bit of a break after 3 consecutive monthly declines. June nudged up by just over 3%. Again, this should come as no surprise following one of the lowest arrival counts in the past several years. No matter, a gain is a gain, regardless of the fact that 2019 continues to outpace 2020 by 12%. Texas City is yet another casualty of the flagging demand for all things tied to oil. Crude exports have all but ceased and refinery activity remains at a record low. To the east, Sabine has yet to see a halt to its monthly arrival declines. January remains the high tide mark for the year and June was the fifth straight monthly drop for the port. Perhaps the summer lull is making a bad situation worse. Nevertheless, a diminishing number of general cargo sailings, a weakening in bulk carrier activity, and well below average tanker movements should not be unexpected in a quarantined world.
Houston logged the lowest gain of the Texas ports at a paltry 1.3% and, at present, lags last year’s activity by 3%. As expected, there were more monthly losers than winners vis-à-vis the various vessel categories. Bulkers saw an unanticipated monthly bounty as it set another high mark for the year following the most recent 10.6% gain. That said, 2 consecutive months of gains still leaves bulkers well over 18% behind last year’s performance. Chemical tankers fell further into the red following its third consecutive slide. Granted, June only saw one less arrival than May. Yet, traffic remains 1.3% off compared to last year. Container ships – the canary in the coal mine with respect to consumer activity – saw its lowest monthly yield for the year. The most recent 11% fall was not enough to pull the year-to-date count into the negatives as the first half of 2020 has seen nearly 6% more container ships than the first six months of 2019. Yet, the entire story is better told by the fewer number of containers flowing into the port since the beginning of the second quarter. The same holds true for general cargo arrivals which also posted a low for the year. Steel moving through the port is down dramatically compared to last year. Undoubtedly, the abrupt cessation of fracking throughout Texas is the major culprit for a monthly demise of 16.3% and a year-to-date faltering of 5.8%.
LPG remains somewhat of a bright spot for the port. This vessel type’s year-to-date progress is well ahead of 2019’s to the tune of 13% following the most recent monthly downtick of 4.5%. Tankers, on the other hand, continue to languish when the 2020 cumulative arrivals are juxtaposed with those of 2019. Yet, there was a silver lining in June as tankers experienced a 15.6% rebound. Overall, car container business in the port is off by 32% for the year but ocean-going tows are holding their own with 24% more arrivals on a year-to-date basis. Closer to the shore, the inland tow community witnessed its third low in a row and creeps ever closer to 2019’s numbers after a very impressive start to the year. Record low refinery activity combined with expiring charters have idled many a tow as several area fleets are bursting at the seams due to lack of demand for barges.
Understanding why the second quarter is flagging in comparison to this year’s first quarter is not too difficult an undertaking. Record low air travelers grounds an unprecedented number of flights which, in turn, saps demand for aviation fuel. Consequently, refinery utilization plummets and barges that move refined products are idled due to too many tows chasing too few barrels. Apply this same set of dynamics to an anemic world economy due to a persistent virus that knows no borders and suddenly the import-export stream of activity falters. Of course, the historic summer trade breather prior to the fall consumption ramp-up does not help matters. Yet, the more information one has as to the reasons, the better one is equipped to adjusting to the circumstances at hand.
Obviously, Francis Scott Key could have never imaged that his four verses of “The Defense of Fort McHenry” could have produced such a patriotic sensation. It certainly was a much-needed tonic after Washington was torched by the British seeking revenge for the burning of York – the capitol of Upper Canada. More importantly, over the decades, as Marines battled enemies in far off lands; or sailors exchanged salvos with opposing warships; or American troops defended liberty in distant countries; the Star Spangled Banner was the salve that healed wounds, the song that motivated the weary, the symbol that freedom is never free. It is the why behind its adoption as our national anthem that provides the raison d’etre for the respect it deserves every day of the year.