Port infrastructure must keep pace with rebound, says economist

Ocean cargo shippers can expect a slight surge in business this year, with the economic tide lifting all boats. This will be particularly evident when it comes to measuring port throughput across the Continent.

Speaking at last week’s San Francisco Roundtable, Council of Supply Chain Management Professionals, (CSCMP) in Oakland, a prominent shipping industry economist emphasized that change may not be ongoing, however.

“The fact that the U.S. is resuming economic leadership is comforting,” said Dr. Walter Kemmsies, Moffatt & Nichol’s Chief Economist. “And our exports are largely responsible for driving this trend.”

Kemmsies, who pioneered development of container volume forecasts by trade lane, utilizes a blend of regional economic data with the identified market reach of U.S. ports. He said almost every major U.S. outbound ocean cargo gateway is benefitting by demand for U.S. goods.

“But we are still looking for sustainable numbers,” he said. “Emerging markets are making the rebound possible but our ongoing deficit in petroleum imports is worrisome.”

Meanwhile, U.S. port authorities should continue to lobby for funds to expand infrastructure, said Kemmsies. The observation resonated with the Port of Oakland shippers who comprise the nation’s top exporters of agricultural cargo.

“Bulk commodities and specialized capital goods (project cargo) fit the profile of U.S. comparative advantages,” he said. “Relative to faster growing emerging markets, the U.S. has a lower cost of capital. It also has a relative abundance of scarce resources – like water – and more advanced biotechnology. Finally, we have more reliable quality control and surveillance of compliance.”

But the higher cost of U.S. labor remains a problem, said Kemmsies, and may not be able to offset the strong demand for raw materials.

“And we don’t want to live much longer with a jobless recovery,” he said. “At the same time, we are encouraged by the government’s commitment to invest in its ports and related industries.”