No Higher ground

No Higher ground West Coast ports see export volumes
join imports in the negative column.

By Keith Higginbotham

   Just as in 2007, when import container volumes fell flat across the West Coast's major ports in 2008, exports remained a single bright spot through most of the year.
   However, as the West Coast ports moved into their all important third quarter peak shipping season, the worldwide economic crisis hit with a vengeance. Imports volumes, already down for the year, appeared to dramatically accelerate their decline.
   Collectively, in the first 10 months of 2008, the five major West Coast ports shed more than 1 million containers of volume compared to the same period last year. The ports of Long Beach, Los Angeles, Oakland, Seattle and Tacoma handled slightly more than 17 million TEUs through October, a 6.6 percent drop from the slightly more than 18 million TEUs reported during the year-earlier period.
   Since the start of 2008, loaded import volumes were down across the board, and in Seattle's case, by double digits. Exports, which had remained strong in the early part of the year, began to falter during the summer and all five of the ports reported declines during October. However, the early export volume gains continue to prop up the numbers and most of the ports may end the year with a positive note in exports.
   Individually, all five ports were down for the calendar year through October, with the Seattle port reporting the largest decline and the Tacoma port reporting the smallest decline.
   The Southern California ports of Long Beach and Los Angeles collectively were down 6.8 percent for the first 10 months of the year to 12.13 million TEUs.
   Individually, the Port of Long Beach's container volume declined 9.3 percent through October to 5.5 million TEUs, compared to 6.1 million TEUs in the 2007 period. Loaded import containers through Long Beach were off 12.8 percent through October, while exports posted a 15.2 increase over last year.

'Once every 100 years you have a storm that is so bad that an area that normally receives no water is actually flooded. The Great Depression was the 100-year ecomonic flood of the 20th century. I look at the current economic meltdown as the 100-year flood of the 21st century '

Brad Dechter president, DHX-Dependable Hawaiian Express

   Los Angeles port officials said cargo volumes through October were down 4.7 percent to 6.63 million TEUs, compared to 6.96 million TEUs handled in January-October 2007. Loaded import containers dropped 5.5 percent, while loaded exports were up 15 percent.
  In the Bay Area, container volume at the Port of Oakland was off 4.7 percent for the year to 1.79 million TEUs. Year-to-date loaded import containers were down 6.4 percent, while exports improved 4.4 percent.
  In the Pacific Northwest, Seattle handled more than 1.45 million TEUs through October, down 11.5 percent from the 1.65 million TEUs moved in the year-earlier period. Loaded import boxes slid 15.9 percent and loaded export volume fell 34.4 percent.
  Nearby Tacoma reported a total year-to-date drop of 2.4 percent to 1.57 million TEUs. Loaded import boxes were off 6.1 percent, while exports increased 15.1 percent.

Financial Woes. A great deal of this downturn in container volumes is due to the global economic situation that began with the implosion of the U.S. markets in August and accelerated through September, spreading rapidly to the rest of the world.
   'It's just going to get worse because now it is a global recession and everything is lowering,' said Candice Flor Hynek, an associate economist at the Los Angeles County Economic Development Corp.
  The weakening U.S. dollar fueled the rise in the U.S. export trade over the past several years, which made domestically produced goods cheaper on the world market. However, the dollar rebounded in the third quarter of 2008 and analyst firm Global Insight predicts it will continue to gain value through the end of 2009.
   'U.S. exports were one of the few bright spots in the economy. A stronger U.S. dollar and global recession will change that,' said Thomas Runiewicz, Global Insight principal and senior economist.
  In addition, many exporters are reporting an inability to secure credit, which is dampening international transactions.
   'A lot of exporters are relying on lines of credit, and if they can not get these due to the credit crunch, then they can not do business,' Flor Hynek said.
  Starting in late 2003 and running through the start of 2007, a trend developed that saw hundreds of banks loosen their standards on commercial and industrial loans, according to the Federal Reserve Board. However, since the second quarter of 2007, this number has reversed dramatically. More banks have tightened standards for commercial and industrial loans in the past 18 months than in the previous six years combined. These tightening standards have put lines of credit, a key instrument in international shipping, out of reach of many firms.
   'We see the export community impacted by the credit crisis – we just don't see the sales in this final quarter and certainly we're concerned,' said Donna Lemm, director of business development at export firm Mallory Alexander International in Memphis. 'We've seen dramatic change and dramatic shifts in just the past six weeks.'
  Brad Dechter, president of Southern California logistics provider DHX-Dependable Hawaiian Express, said he likens the current financial situation to a so-called 100-year flood.
   'Once every 100 years you have a storm that is so bad that an area that normally receives no water is actually flooded. The Great Depression was the 100-year economic flood of the 20th century. I look at the current economic meltdown as the 100-year flood of the 21st century,' Dechter said.