US Gulf ports poised for Latin America trade rebound

US Gulf ports poised for Latin America trade rebound

Port Houston.

The Gulf ports’ geography and railroad links provide a natural flow of Latin American trade to and from destinations as far north as Vancouver and Toronto. Above: Port Houston. Photo credit: Port Houston.

US Gulf ports have plenty going for them. Laden container growth of 3.7 percent over the last 10 years on a compound annual basis outpaced that of East Coast ports, at 2.5 percent, and West Coast ports, at 0.1 percent — and the resin boom has not even begun. Exports of plastic resins from Gulf Coast-centered production are forecast to rise 50 percent by the end of 2019 and to double by 2022.

Unsurprisingly, the potential for further Asian import growth through Gulf Coast ports — which, at 17 percent, was triple that of East Coast port growth over the last decade, albeit from a lower base — and capitalizing on resin production dominated discussions at the 3rd Annual JOC Gulf Shipping Conference in Houston this week.

Given less attention but still deserving a close watch is the potential for Gulf ports to funnel a rebound in Latin American trade. North American exports to Latin America are forecast to grow 4 percent to 2.6 million TEU, down slightly from 4.2 percent last year, according to IHS Markit’s most recent Trends in the World Economy and Trade forecast. Container volume in the other direction is forecast to expand 3.6 percent to 2.9 million TEU after contracting 3.4 percent in 2017. The overall strengthening outlook comes as Latin America GDP is set to rise to 2.2 percent this year, up from 1.3 percent in 2017, according to IHS Markit, parent company of JOC.com.

Latin America has been very stagnant for the last several years and is now just showing growth,” Craig Mygatt, president of Maersk Line affiliate SeaLand, said in his April 17 keynote address at the Gulf Shipping Conference.

Volume between the Gulf and Latin America rose 3.7 percent last year to 950,544 TEU, slower than the 4.3 percent increase to 4.9 million TEU for the United States as a whole, according to PIERS. The Gulf’s five-year compound annual growth rate of 4 percent lagged behind the East Coast’s 4.9 percent increase, the West Coast’s 7.1 percent increase, and the 4.9 percent increase in total US volume.

SeaLand is not the only carrier seeing growing potential for US-Latin America trade. For example, with an economic rebound driven by reformist technocrat President Mauricio Macri and after “a torrid time in Argentina for more than a decade,” the Ocean Network Express (ONE) Network feels “now we have turned the tide and are in for a sustained period of an improving economy and trading situation,” Patricio Campbell, head of ONE Argentina, told JOC.com. There is plenty of space to rebound, considering volume through the Port of Buenos Aires, which handles nearly all of of the country’s container trade, was 1.5 million TEU in 2017, roughly the same as 10 years ago.

The forecast growth in Latin America-US container trade is far from a sure bet, with much hinging on a handful of presidential elections that will determine whether economies will stay on course for economic reform and freight infrastructure investment. The election of Costa Rica’s center-left President Carlos Alvarado in early April and conservative Sebastián Piñera as Chilean president in December are steps in the right direction, but elections in Brazil and Colombia remain. It is also unclear what direction Martin Vizcarra will take Peru after the vice president took the reins in late March after former president Pedro Pablo Kuczynski resigned over a corruption scandal.

The Gulf ports’ geography and railroad links provide a natural flow of Latin American trade to and from destinations as far north as Vancouver and Toronto via Canadian National Railway’s network connecting to Mobile and New Orleans, Mygatt said. There is growing potential to build on perishable imports from Latin America with moldings and components built from the resins imported from the Gulf, he told JOC.com on the sidelines of the Gulf Shipping Conference.

The billions of dollars being invested in Gulf Coast ports is a good start, but more help is needed from state and federal governments, he told more than 400 attendees. Even more is needed to enable Latin American governments to strengthen their ports and inland connections.

It is common, Mygatt said, for ships to wait three to four days to berth at Central American ports and experience sluggish loading and unloading once docked. Lack of schedule reliability forced SeaLand to omit a direct call at Moin, Costa Rica, but the completion of APM Terminals’ $1 billion container terminal, set for early 2019, reflects the private sector’s ability to lead. Now, more Latin governments need to get on board.

Contact Mark Szakonyi at mark.szakonyi@ihsmarkit.com and follow him on Twitter: @szakonyi_joc.