So where do we go from here? The West Coast waterfront labor contract has been completed after another trying negotiation process. The peak import shipping season, which in busy years would have already started, is nowhere to be seen and may not arrive at all. Oil prices approached $150 per barrel before retreating over the past couple weeks and are still more than 40 percent higher than at the start of the year. Gasoline prices remain near $4 a gallon.
The stock market has nosedived into bear market territory and even briefly crossed below the 11,000 mark. The Consumer Confidence Index fell to 56.4 in June, its lowest level since May 1980, a significant drop when compared to the average level of 86.7 last year. Mortgage foreclosures continue to rise, and housing prices continue to fall, as inflation has inched up, crossing above the 4.0 percent annual rate level. Unemployment is rising, and the list of bad economic news grows. All this to say nothing of the costs of supporting wars in Iraq and Afghanistan, neither of which appears likely to end soon.
Since the start of 2008, most U.S. ports have seen containerized import volumes decline on a month-to-month comparison with 2007. One noted forecaster does not expect any increase in these numbers until at least October and then predicts only a modest 2.7 percent increase. Exports have remained strong, but exporters are increasingly unhappy with carrier performance related to rolled bookings, insufficient empty container inventories and generally poor customer service.
There can be little or no doubt that there are strong connections between the state of our economy and the weak performance of the shipping business.
Never let it be said, however, that we are a bunch of pessimists. Poor financial results; reduced container movements; customer dissatisfaction; none of these are able to put a damper on the enthusiasm of the international shipping business for newer, better, bigger ships. The global container ship order book calls for global capacity to increase by 50 to 60 percent between now and 2012-13. Even the most optimistic forecasters are not ready to suggest that cargo volumes will increase to match. We should also bear in mind that the increased vessel capacity will require millions of new container units, and steel prices will not hold still for this necessity, so costs will escalate here as well.
Perhaps there is some good news, of a sort, in this rather gloomy picture. The shipping companies are not alone in their enthusiasm for building new and bigger trade facilitation devices (ships). The nation's ports are very much in the game, too, especially on the East and Gulf coasts. Convinced that West Coast ports will be unable to handle the increased volume of imports from Asia, and in advance of the scheduled 2014 completion of the Panama Canal expansion, a dozen Gulf and East Coast ports (Houston, New Orleans, Mobile, Gulfport, Tampa, Port Everglades, Miami, Jacksonville, Savannah, Charleston, Wilmington, N.C., and Virginia) have major infrastructure projects in the works. In total, these announced projects amount to about $11 billion of new port infrastructure.
There's more. It's a bit difficult to gather all the projects and their estimated costs, but based on press reports over the past 90 days or so, here is another list of East and Gulf Coast ports with infrastructure projects planned: Freeport, Beaumont and Galveston, Texas; Port Manatee and Panama City, Fla.; New York-New Jersey; Philadelphia; Massport; Davisville, R.I; Halifax and Melford, Nova Scotia; St. John's, Newfoundland; and Montreal.
West Coast ports will not sit idly by while all this is going on to their east. Projects are under way or planned at Prince Rupert and Vancouver, British Columbia; Seattle and Tacoma, Wash; Portland, Ore; and Oakland, Calif. Los Angeles and Long Beach must be up to something; I just couldn't find it. Finally, don't forget Mexico: It may be only a beach today, but tomorrow there will be the Port of Punta Colonet.
Oh, one more thing: the Department of Transportation reports that there are 3.9 million miles of roadway in the country. Of this, 3 million miles are rural roads. The Interstate Highway System accounts for only 1.2 percent of total mileage, but carries 24.1 percent of total miles traveled. Between 1980 and 2000, road and street mileage increased 2.4 percent; the number of vehicles increased 39.8 percent; the number of miles traveled increased 81.2 percent. Meanwhile, no new interstate highways are planned! Let's not talk about the bridges . . .
Need to go somewhere?