Pick a Number

By Jock O’Connell

You know the feeling. You’re reading your morning paper or peering at your computer screen and up pops a number that looks just plain wrong. Almost invariably, your eyes crinkle and, depending on your mood, age, or whether you’ve had your second cup of coffee, your reaction might range from a variation on “gosh, that doesn’t look right” to an even more explosive expletive.

I experienced such an episode on February 16 as I squinted at a figure cited in separate articles in The Wall Street Journal and Logistics Management that were based on the same report by an outfit in London named Panjiva, Inc., which has since been acquired by S&P Global, a bigger fish in the market intelligence business.

The number was 7.7%, and it was, by Panjiva’s reckoning, the margin by which shipments to U.S. ports in January exceeded those in January 2017.

No doubt cobbling from a corporate press release, the Logistics Management piece bore the headline: “Panjiva points to strong import growth to start 2018.” The sub-head pretty much laid out the story: “January shipments, at 1,006,861, were up 7.7% annually compared to 934,447 in January 2017.”

Similarly cobbling, the WSJ article began: “U.S.-bound ocean shipments increased nearly 7.7% across all of the nation’s seaports in January, according to Panjiva.”

Wow, what an impressive start to the new year! And that—with the exclamation point at least figuratively included—was decidedly the impression left by both articles, even though the WSJ article went on to sound a mildly discordant note: “California’s ports…didn’t see import volume grow in line with Panjiva’s national estimates in January.”

Indeed, California’s three big ports, which had days earlier announced their January container statistics, had collectively posted a respectable but, by Panjiva’s expectations, relatively modest 3.5% year-over-year increase in inbound loaded TEUs.

Still, Panjiva’s report seemed to provide sufficient cause for the nation’s ports and shippers to break out the champagne to celebrate at least a momentary high-point. For the WSJ article also noted Panjiva’s advisory that January’s “momentum will likely slow in February and March.”

My “that can’t be right” reaction to Panjiva’s 7.7% growth figure was partially prompted by an exceedingly conservative January container trade estimate I had seen a month earlier from Global Port Tracker, a co-production of the National Retail Federation and Hackett Associates. As reported in the January 8 edition of the Journal of Commerce: “The Global Port Tracker forecast January volume through the ports will be 1.68 million TEU, up 0.2 percent year over year.”

So, there you have it. January’s containerized import trade grew by either +7.7% or +0.2 %.

Not exactly the finest moment in the annals of box-counting.

Now you’re probably guessing the discrepancy might be due to a difference in metrics. After all, the Global Port Tracker counts TEUs, as does virtually everyone else in the maritime industry. By contrast, Panjiva measures trade in “shipments,” and here’s where things can get terribly confusing for those of us struggling to understand whether inbound container trade was up a lot or not much at all in the first month of the year.

Let’s begin with a very basic question about the Panjiva estimate. Like, what’s a shipment? According to Panjiva’s Christopher Rogers: “The units are raw shipment count. We find on average that for containerized traffic there is around 2 - 2.2 TEUs per shipment (which makes sense given most shipments relate to one 40-foot container for marine traffic).”

Now remember that Logistics Management article that reported Panjiva’s claim that U.S.-bound shipments in January totaled 1,006,861? Given Mr. Rogers’ explanation, what Panjiva calls “shipments” is looking a lot like FEUs.

Bear with me here while I do some basic arithmetic. Assuming we are talking about loaded containers and if indeed there are roughly 2-2.2 TEUs per shipment, then, by Panjiva’s lights, U.S. ports should have seen somewhere between 2,013,722 TEUs and 2,215,094 TEUs in inbound loaded traffic in January. Or between 1,006,861 and 1,107,547 FEUs.

That’s rather more than the Global Port Tracker forecast of 1.68 million TEUs for the same month, but then Global Port Tracker does not attempt to track cargos through every port. (The U.S. ports it does cover are: Los Angeles/Long Beach, Oakland, Northwest Seaport Alliance, New York/New Jersey, Virginia, Charleston, Savannah, Miami, Port Everglades, and Houston. It also monitors trade through the Canadian ports of Vancouver, Prince Rupert, and Montreal.)

So, in the end, how many loaded inbound TEUs did America’s chief maritime gateways report handling in January and how many more TEUs did they handle this January than last?

The January numbers provided by the eleven U.S. maritime gateways monitored by the Global Port Tracker show an inbound loaded TEU count of 1,735,247, which represents a 3.7% gain over January 2017.

PMSA compiles container statistics from 17 mainland U.S. ports, fifteen of which post monthly inbound/outbound container trade statistics that helpfully distinguish loaded from empty containers. Those 15 include the 11 container ports covered by Global Port Tracker plus the Ports of Boston, Baltimore, Jacksonville, and New Orleans.

Combining the data supplied by these fifteen ports, we calculate that January saw a 3.6% year-over-year increase in inbound loaded TEUs—1,812,848 TEUs this January over 1,749,024 in January 2017.

These increases reported by the nation’s largest container ports are reasonably consistent with the U.S. Commerce Department’s finding that total containerized import tonnage entering American ports in January was 14.73 million metric tons, 3.1% higher than the 14.28 million metric tons that had arrived a year earlier.

As the ports PMSA monitors handle more than 90% of the nation’s maritime box trade, it certainly does not appear that America’s ports (even including our Canadian cousins) saw anything close to a 7.7% January over January jump in inbound loaded TEUs from a year earlier. Nor, obviously, did they squeak by with a 0.2% gain.

Looming Trade Wars and USWC Ports?

President Trump’s decision to impose tariffs on imported steel and aluminum has definitely set the cat amongst the pigeons, as some of our older British friends remain fond of saying. The latest move was foreshadowed by the recent rehabilitation of hardline trade nationalist Peter Navarro in the president’s inner circle. Now, with the resignation of Gary Cohn, head of the National Economic Council, Commerce Secretary Wilbur Ross and Navarro seem to be ascendant. Still, the president’s aggressive trade agenda is being resisted within his own party and by a wide range of important industries, especially those which utilize steel and aluminum in their products. Even the hitherto sycophantic House Speaker Paul Ryan and other Republicans in Congress have now begun pushing back against Trump on the issue of tariffs.

The near-term outlook for California’s ports had already been roiled by President Trump’s decision in January to impose tariffs on imports of solar panels and washing machines. How America’s trading partners would react has lately become a consuming topic of discussion and worry among economists and shippers alike.

Impossible as it has become to fathom the president’s shifting moods, economists are increasingly out of our element in trying to forecast USWC trade flows. The good news, if there is any, is that countries disposed to retaliate have historically targeted U.S. exports from states or congressional districts that are politically sensitive to the incumbent administration.

In the current instance, the European Union has threatened to impose restrictions on such iconic items as Kentucky bourbon, Harley-Davidson motorcycles, and blue jeans. All three products have one thing in common: they are produced in regions represented in Congress by Republicans. Republicans Mitch McConnell and Rand Paul represent Kentucky in the U.S. Senate. Harley-Davidson is headquartered in Republican Paul Ryan’s Wisconsin, while its manufacturing facilities are located in the Wisconsin congressional districts represented by Republicans Jim Sensenbrenner and Sean Duffy along with the Pennsylvania district represented by GOP Congressman Scott Perry. And, despite Levi Strauss’ long association with California, nearly all American-made blue jeans are now manufactured in Mississippi (Republican Senators Thad Cochran and Roger Wicker), Tennessee (GOP Senators Bob Corker and Lamar Alexander), and Texas (Republican Senators John Cornyn and Ted Cruz). While more than 99% of Levi’s jeans are made outside the United States, the San Francisco-based company does have a single collection of “Made in the USA” 501 jeans, sourced from a small denim mill in North Carolina (GOP Senators Richard Burr and Thom Tillis).

For its part, China has singled out U.S. soybeans as a likely target of retaliation. The states that would be hurt most by such a move would be Illinois, Iowa, Minnesota, Nebraska, Indiana, Missouri, Ohio, North Dakota, South Dakota, and Arkansas. All but two cast their electoral votes for Trump in the 2016 presidential election. The U.S. Department of Agriculture does not even acknowledge soybean production along the West Coast in its latest survey of soybean plantings by state.

How would an anticipated curb on Chinese imports of American soybeans affect USWC ports? U.S. soybean shipments to China in January were already down 31% from a year earlier. U.S. trade statistics indicate that USWC ports handled 658,668 metric tons or 20.5% of U.S. soybean exports to China in January. However, the data were likely skewed by upstream flooding along the Mississippi River and its major tributaries that hampered barge shipments to Gulf Coast ports. According to the U.S. Department of Agriculture, Gulf ports handle nearly 60% of U.S. soybean exports. The flooding issue persisted into February.

The commentary, views, and opinions expressed by Jock O’Connell are his own and do not reflect the views or positions of the Pacific Merchant Shipping Association. PMSA does not endorse, support, or make any representations regarding the content provided by any third party commentator.