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Our overall outlook for the US economy is cautious and we maintain our outlook for subdued growth at
the US's main container ports in 2013, on the back of continuing concerns about the health of the US
economy. For 2013, we maintain our growth forecast of 2.1%, owing to increasing domestic and external
headwinds. The downside shock risks remain prevalent, but the balance of evidence suggests that the
economy has and will continue to avoid recession barring a major crisis. There are two major risks to the
economy over the next six to 12 months. The first is the impending fiscal tightening, set to impact in
January 2013 absent an active policy decision to postpone. The second is the eurozone crisis, which
threatens the global economy as a whole.
Volumes at US ports face headwinds in the form of sluggish private consumption recovery and slow
demand for exports. US private consumption will continue to recover very slowly as a combination of
still-high unemployment, ongoing deleveraging, low wage growth and a dependency on government
transfers continue to weigh on spending growth. The US export sector is likely to face increasing
headwinds from abroad, centred around reduced European demand amid a eurozone recession and
potential for dollar strength. Just under one quarter of US exports go to the European Union, and the
European crisis is likely to impact non-eurozone demand for US goods and services.
Key Industry Data
- At the port of Los Angeles (LA) we forecast 4.7% year-on-year (y-o-y) growth in total tonnage
in 2013, to reach 69.5mn tonnes.
- At the East Coast port of New York/New Jersey (NY/NJ), growth is forecast to be 1.4% y-o-y in
2013, to reach 143.4mn tonnes.
- We expect LA to record growth of 4.4% in twenty-foot equivalent unit (TEU) throughput in
2013 to reach 8.6mn TEUs.
- We expect NY/NJ to record a 5.3% increase in TEU throughput in 2013, to reach 6mn TEUs.
Key Industry Trends
Expanded Rail Terminal To Support Savannah Growth
BMI believes that upside risk is presented to our already-bullish throughput growth forecast for the US
Port of Savannah as the Georgia Port Authority (GPA) has announced the opening of its expanded
intermodal transfer facility. The greater connectivity presented to the port by the new facility will help the
Port of Savannah accommodate the expected increase in volumes once the expansion of the Panama
Canal is completed.
Sandy Poses Risk For New York/New Jersey Forecast
BMI believes Hurricane Sandy, the storm that recently battered the US North East - and particularly its
coastal regions - could lead to a revision of our throughput forecasts for East Coast facilities. The Port of
New York/New Jersey was the worst affected, and was closed for a number of days. Other facilities are
poised to benefit from the run-off of vessels.
MSC Returns To Port Miami
BMI believes that a new service to call at PortMiami in Miami-Dade County, Florida, will provide upside
potential to the port's container throughput in the coming years, and could help the facility regain lost
volumes. This ties in with our wider view on the port, that throughput will grow in the wake of the
Panama Canal expansion, scheduled to be completed in May 2015.
Risks To Outlook
The US economic recovery remains slow; BMI expects average annual GDP growth of 2.5% to 2021.
Further downside is presented by the expected slowdown in Chinese economic growth, which will
damage demand from the US's biggest export market. The eurozone is unlikely to be able to pick up the
slack, due to the ongoing crisis there. BMI believes the main risks to our outlook for US container
shipping are on the downside. A bearish consumer outlook, combined with the withdrawal of shipping
lines from the transpacific route and cuts to federal funding for port projects mean that growth in the box
shipping sector could be slower than expected.
Upside potential is presented to East Coast ports by the expansion of the Panama Canal, due for
completion in 2015. The project will allow post-Panamax vessels to pass through the Panama Canal to
call at east coast ports, bypassing the traditional US hubs of LA and Long Beach.
On the dry bulk side there is upside potential from the fact that we expect the US to become a net exporter
of coal over the medium term as domestic demand slows and Asian demand remains strong. We are
already seeing the development of new port facilities on the West Coast, such as SSA Marine's Gateway
Terminal, in order to cater for an expected increase in coal shipments.