REALITY CHECK: US CARGO EXECS SAY SEP IMPORTS WAY UP YR-TO-YR
By Gary Rosenberger
NEW YORK (MktNews) - September imports are easily outpacing a year ago and rising above summer's record volumes, spurred by retail demand and increased freight capacity along trans-Pacific routes, say cargo officials.
August imports appear to have smashed old import records that were set in June and July, according to data at the nation's two largest ports.
Last August, the Port of Long Beach, with its 214,709 TEUs of inbound cargo, smashed its prior record of 205,640 TEUs posted in May. (TEUs are twenty-foot equivalent units, a standard measure of containerized cargo.)
The Port of Los Angeles logged 180,687 TEUs of inbound cargo in August, beating its prior record of 176,444 TEUs set a month earlier.
Export data showed modest increases in August but not nearly enough to offset the heavy imports, both ports say. All this suggests a further expansion of the trade gap and continuing expectations of robust consumer spending by retailers.
Ports did not have September data at this writing, but nevertheless anticipated a continuing upward trend based on seasonal factors.
"Sheer volumes will be higher this year than last year," said Jeff Leong, a spokesman for the Port of Los Angeles.
"We're anticipating a continuation of the growing volumes we experienced in the last four months," he said, adding that the holiday shipping season doesn't generally see a slowing until at least November.
"Inbound cargos will still remain strong at the port, as we anticipate more of the kinds of goods that you see at shopping malls," Leong said.
"Exports are much more volatile than the inbound side, but we're hopeful September will show an increase over the comparable period last year," he said.
A Port of Long Beach official said there are indications that steamships aren't coming in as full as in the past, but that may be a function of the expanded capacity.
"We're hearing from customers that volumes are falling off -- but they don't know if that's because there is additional service or we've peaked early this year," said Don Wylie, managing director of maritime services at the port.
"I suspect we haven't seen the peak yet -- I think we're still in he middle of a very strong season," he said.
Another shipping official said there is no reason to expect a narrowing of the trade gap, considering the greatly expanded trans-Pacific service that mostly abets imports while doing little for exports.
"I know that containers are way up," said Guy Fox, chairman of the board of Global Transportation Service, a freight forwarder based in Seattle and Los Angeles. "The companies we handle, especially in retail, are bringing in much more than they did the previous year,"
Fox said companies are importing more than they did last year simply because they can -- now that cargo ships have greatly expanded service from Asia to the West Coast as a result of rate increases.
"There's more physical space available this year," he said.
He argues that the trade gap could have been higher last year, but for logistical problems that prevented companies from importing more.
"There were space problems last year," he said.
"There wsan't enough payload space available and cargo was always being rolled onto the next vessel," he said. "Even though you had a solid booking, if there wasn't any room, your container would often come on another vessel a week late."
He added that "if you really negotiated a bargain basement price on your cargo, the stuff would be rolled over to the second or third vessel -- you get what you pay for."
Now, with the increased capacity, there are no problems getting payload space -- and, in fact, Asian ports are so busy loading containers that they're getting behind in paperwork, Fox said.
"We often get the bill of lading just a day or two before the boat is scheduled to dock," he said.
The export side is far less hectic, Fox said.
"Exports are picking up a little as Asia starts to improve, but they're still not buying consumer goods -- and that's what it's going to take to really increase exports," Fox said.
He noted that steamship companies continue to snub requests to transport containers intermodally to the Midwest because of they lose money on the, usually empty, return trip to the West Coast.
Fox expects no letup in the import surge through the end of 1999, arguing that Y2K worries will keep manufacturers building inventories beyond the time the holiday rush typically ends.
A steamship company executive said retail is driving the "phenomenal" growth in imports while exports continue to be "a challenge" on a global basis.
"Basically, inbound, it's strong worldwide," said John Crawley, vice president of marketing for Sea-Land Service in Charlotte, North Carolina, a division of CSX.
"Outbound it's still weak although less weak than it's been -- there are some signs of recovery, but not a heck of a lot," he said.
Crawley said imports are coming in hot and heavy, not just from Asia, but from all over the globe.
"Inbound from the Americas is very, very strong, while exports to that destination have dropped," he said. "Europe is exceptionally strong inbound, while outbound continues to be a challenge."
He noted that the biggest source of inbound traffic stems from retailing, namely, "the Wal-Marts, Home Depots and Dayton-Hudsons."
"We've got more demand than usual from retailers -- that market is as big as it's ever been," he said, adding that increases in the retail sector are in "the double digits."
"It's a phenomenally strong market driven by the insatiable demand for foreign goods," he said.
"Retailers are growing faster than autos or any other sector," he said.
Crawley sees almost nothing in the future to stem the flow of imports.
For one, he suspects that Y2K worries will prompt importers to raise their level of orders in anticipation of potential bottlenecks.
For another, the momentum of U.S. consumer spending seems to knock past any economic obstacle in its path.
"Markets seem to be always worried about the landing -- whether it will be soft or hard. But we find that inbound trade has been pretty resilient to any changes in the economy," he said.
Crawley argues that it would take a recession to slow the pace of consumer spending and halt the tide of inbound cargoes.
On the issue of physical obstacles to trade, Crawley noted that any delays prompted by Hurricane Floyd were temporary. "The net impact of Floyd was negligible," he said.
The U.S. Commerce Department is scheduled to release international trade data for August on Wednesday at 8:30 a.m. EDT. The July trade deficit rose by a record $25.2 billion, versus a rise of $24.6 billion in June.
Editor's Note: Reality Check stories survey sentiment among business people and their trade associations. They are intended to complement and anticipate economic data and to provide a sounding into specific sectors of the U.S. economy.
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