Signs of Recovery

Signs of Recovery

I anticipate a strengthening of business in the latter part of 2010, as the Port of Mobile is beginning to see recovery not only in regional manufacturing, but also in some industrial sectors in China, Europe and Brazil. Though markets are nowhere near their pre-recession levels, the mining and manufacturing sectors are beginning to show signs of recovery. If the trend holds, this will be good news for shippers hurt by the slowdown in construction and consumer goods production.

The global market meltdown and tight credit have had, and continue to have, deep financial impact on some industries, leading to inevitable consolidations in the manufacturing and transportation industries. This thinning of the pack, so to speak, will generate leaner, more competitive players in the marketplace, which can only accelerate economic activity, with fewer players in pursuit of returning market-generated business.

Economic recovery initiatives launched by the U.S., China, Japan, Brazil and the European Union are beginning to slow the 18-month global downward spiral. Restructured financial institutions are writing off bad investments, and massive energy- and transportation-related infrastructure projects are getting under way.

These initiatives, whether or not ideologically supported, will surely stimulate economic activities and return cargo volumes to our ports within the year. I see the need for caution and tempered expectations, as recovery will be slower for some more than others. Other factors, such as transportation infrastructure, port services and regional economic outlooks, also will play a role in determining how fast ports and breakbulk markets will recover.

Remarkably, breakbulk business at the Port of Mobile this year has held steady, primarily because of our inland transportation system, new or expanding regional manufacturing projects and the value of the dollar. This holds particularly true for our region’s steel and pulp exports. Had Mobile not been positioned by proximity or served by five railroads, inland waterways and a strong highway network, many domestic manufacturers would have sought better facilities with lower-cost logistics.

Port investments geared toward handling both import and export business, as well as a diversified cargo and service base, have provided Mobile with much-needed capability and flexibility during these tough times. The weak dollar is generating business for domestic order books and boosting production.

Some general cargo imports also are holding steady because of manufacturing investments in our hinterland, coupled again with the availability of a strong rail, water and highway distribution network at Mobile. Imports of machinery and components bound for new plant and mill construction throughout the Southeast have contributed to a steady flow of project cargo.

Mobile’s London Metal Exchange designation, which has increased the port’s nonferrous metals business, also has helped to bolster imports.

While we have seen the effect of the recession in some commodity groups, these few bright spots should continue to carry us through 2010.

James K. Lyons is director and chief executive of the Alabama State Port Authority.