The nation’s ports didn’t experience the cratering of traffic anticipated earlier in the year because of the global pandemic, and according to forecasters the next two years are looking pretty good.
Moody’s Investors Service revised its outlook for the U.S. public ports sector to stable from negative in a Dec. 4 report and the twin ports of Southern California posted record setting numbers in October.
Exports through California ports hit nearly $18 billion in October and imports neared $50 billion, according to U.S. Department of Commerce data compiled by the California Center for Jobs & the Economy.
“Despite the current economic downturn, trade activity is straining the capacity of ports both in California and much of the rest of the nation,” according to the center’s
Nationally, the Moody’s Investors Service prognosis for ports over the next 12 to 18 months is for 5% growth in cargo volumes.
The anticipated growth over the next two years is propelled by strengthening economic activity and normalizing supply chain conditions in the U.S. and globally, Moody’s wrote, adding a cautionary note as there are significant risks to the still nascent economic recovery.
“The nascent cyclical recovery that started over the summer in the U.S. and Europe is now at risk as a result of a rapid rise in coronavirus infections and new measures designed to curb virus transmission, as the pandemic shows no signs of abating,” Moody’s economists wrote in a separate November report.
The economic recovery over the coming year will be highly dependent on the development and distribution of a coronavirus vaccine, effective pandemic management and government policy support, Moody’s economists wrote.
The growth in port volume nationally comes after volumes declined by 5% in 2020, according to Moody’s.
Moody's prognosis for growth in port volume mirrors what UCLA Anderson Forecast Senior Economist Leo Feler wrote in the December forecast released Wednesday.
Feler predicted that holiday gift buying would focus on buying "stuff" online rather than services such as restaurants, vacations and entertainments given the spiking COVID-19 numbers.
"The only difference this year compared to past years is that Americans have been buying more stuff for the past nine months," Feler wrote. "A key question is whether there's saturation in consumption of goods or whether it's possible for goods consumption to increase even further, given that consumers can't spend as easily on experiences."
Sustained higher goods purchases "means more imports," he wrote.
Focusing on California, Beacon Economics noted in a Dec. 4 report that California exporters have fared somewhat better than U.S. merchandisers overall, who saw a 6.9% drop in exports from one year earlier. California also fared better than Texas, whose October export trade was down by 13.6%, according to Beacon.
“Businesses in California shipped a total of $14.7 billion in merchandise abroad in October, a nominal decline of 5.1% from the $15.5 billion in exports the state recorded in the same month last year,” according to Beacon’s report. “But October’s total was up 14.8% from September, indicating a more promising trend.”
For the month of October, Los Angeles-based Beacon economists wrote that California accounted for 11.1% of all U.S. merchandise exports. Through the year’s first 10 months, California’s $127.9 billion export trade was running 11.5% behind last year’s $144.6 billion pace, Beacon wrote.
California’s export trade “continued to be dented by the resurgent wave of COVID-19 cases both here and abroad as well as by the ongoing tariff dispute,” Beacon analysts wrote.
“While October’s export figures may appear disappointing, they did represent a very handy improvement over September’s export numbers,” said Beacon Economics International Trade Advisor Jock O’Connell. “Unfortunately, although a weaker dollar is helping boost exports, the pandemic and unresolved trade policy disputes remain major deterrents to export growth.
“Reports from California’s three major seaports indicate that the enormous surge of imported containers with which the ports are coping has limited exporters’ access to containers as importers have been using inbound containers to supplement their warehouse capacities rather than making the containers available for exporters,” O’Connell wrote.
Imports have fared better, and the Census Bureau reports that California was the state-of-destination for 17.9% of all U.S. merchandise imports in October, with a value of $39.4 billion. That was up 8.1% from the $36.4 billion in goods the state imported one year earlier, according to Beacon.
The Port of Los Angeles reported breaking its previous record for port activity and posting the busiest October in its 114-year history notching more than 980,000 in twenty-foot equivalents (TEUs) the standard measure of container volume, 27% higher than numbers posted in October 2019.
"Overall volume has been strong yet the trade imbalance remains a concern," said Port of Los Angeles Executive Director Gene Seroka in a statement. "For every three and a half containers that are imported into Los Angeles from abroad, only one container leaves filled with U.S. exports. One-way trade will not put Americans back to work and it adds to logistical challenges in the supply chain.
"With COVID-19 cases on the rise nationwide, the U.S. economic outlook remains uncertain," Seroka said. "Volume swings like the one we are seeing are an outgrowth of this uncertainty."
The neighboring Port of Long Beach released its volume numbers for November Wednesday noting it had posted its best November on record, lifted by the holiday retail rush and a surge in personal protective equipment deliveries amid the latest nationwide wave of COVID-19 cases, according to port officials.
Dockworkers and terminal operators moved 783,523 TEUs in November, a 30.6% jump compared to November 2019. Imports were up 30.5% to 382,677 TEUs and exports were down 5.2% to 117,283 TEUs. Empty containers shipped oversees rose 55% to 283,563 TEUs.
"Online shopping and PPE purchases are on the rise as consumers continue the stay-at-home lifestyle, but the overall economic outlook is uncertain with another wave of COVID-19 spreading across the country," said Mario Cordero, executive director of the Port of Long Beach. "We're dealing with the surge in containers by partnering with stakeholders, utilizing a temporary storage yard and prioritizing dual transaction truck trips that balance inbound and outbound cargo flows."
The Long Beach port has moved 7.3 million TEUs during the first 11 months of the year, up 4.7% from the same period in 2019, port officials said.
