A DRAMATIC slowdown in activity at US ports may extend well into 2009 as the recession deepens, spelling weak demand for diesel from the shipping and trucking industries.
Cargo volumes at major US container ports have fallen for 17 straight months, and 2008 ended as the weakest year since 2004, according to the monthly Port Tracker survey by IHS Global Insight for the National Retail Federation.
“We don’t expect a significant increase in traffic at the ports until retail sales return to normal levels, and even then retailers will be careful not to overstock,” said Jonathan Gold of the National Retail Federation.
Port activity is a key economic indicator because it reflects consumption and trade. It is also a crucial reflection of demand for diesel, the fuel of choice for trucks moving goods to and from the ports.
US demand for distillates like diesel and jet fuel fell by 5.8% in 2008 – the biggest drop since 1980, according to the American Petroleum Institute. This played a major role in the global decline in energy use that has pushed oil prices down more than US$100 a barrel since July.
The dropoff in diesel use may be accelerating, port activity statistics show.
The number of loaded shipping containers going in and out of the busiest US port complex in Southern California fell 23% in December from a year earlier, and 16.4% from the previous month, according to data from the Port of Los Angeles and the Port of Long Beach.
Together the ports – the two largest in the country – handle more than 40% of US imported goods.
“That’s a very brutal contraction at the end of last year,” said Antoine Halff, energy analyst at Newedge Group. “The volume of global imports and exports is coming down very hard and that’s likely to be continued due to the sudden eclipse of the US consumer.”
Container volume at the US ports may fall 5.6% in the first quarter of this year, according to Port Tracker.
Port of Long Beach spokesman Art Wong said: “We’re waiting for some signs that there will be a turnaround. This may be the hardest year to forecast because nobody knows when we are going to hit bottom.”
Trucking tonnage carried on US highways has fallen about 20% over the past six months – the biggest decline on record, according to the American Trucking Association.
The ATA says truckers can consume about 2.6 million barrels of diesel per day, accounting for about two-thirds of US distillate consumption.
Source: Star Online