Features
Bulk and Breakbulk: 8 Market Trends
1 A slumping economy seems to be having a worldwide reach.
“We have a fair amount of bulk and breakbulk, but it’s nothing to write home to Momma about,” says John Hyatt, vice president at New Orleansbased customs broker and freight forwarder The Irwin Brown Co. “It’s flat, and it’s been flat for a while. The general economic malaise has drifted down to the international sector finally.”
2 Lack of capacity is sending costs soaring.
With ship construction costs high and revenues low for many years, relatively few vessels were built. Filling this gap isn’t going to be cheap or easy, and in the meantime, the shortage is sending costs skyrocketing.
“Right now, around the world, there is breakbulk cargo looking for ships,” says Susan Becklund, director of operational services at the Port of Tacoma. “There is a huge need for more ship capacity, and no one thought that was going to happen,” she says.
3 Radically declining real estate construction rates have hit ports hard.
While the housing booms seemed endless, ports made major investments in facilities designed to handle products such as ferro cement and wood products. Although these facilities aren’t standing empty, some ports are seeing drops of 25 percent or more.
On the East and Gulf Coasts, steel is a major issue. “We’re projecting about a 6 percent decrease in volume for this fiscal year, which just ended yesterday,” says Joel Valenzuela, department head of trade development for the Port of San Diego. “A lot of our building materials are down, such as sand, cement and lumber,” he says. Revenues are still up, however, because of the port’s intensive effort to diversify its client base in recent years.
4 Imports have declined dramatically, while exports are on the increase.
In fact, the drop in the dollar is driving a rise in U.S. exports in many areas, and it’s having a considerable impact on the economy. Port industry members say it’s a good news/bad news situation that seems to be holding all over the United States. “On the one hand, we’re losing cargo. On the other hand, we’re able to secure exports,” says Vered Nohi Becker, marketing services manager for the Port of Wilmington, Del.
5 Steel itself is having a big impact on the bulk and breakbulk businesses.
Once almost moribund, the American steel industry is making a big comeback because of the rise in global demand, the decline in the dollar and general increases in shipping costs. Significant new plants are being opened both to make new steel and process steel imported from other places. Ports with deep channels will benefit most on the import side, with cargoes moving to vessels that need 47-foot channels, says John Martins of consultancy Martin Associates Inc.
6 This year’s Midwest floods could have a major impact on the industry.
Officials are concerned about what will happen but say not enough information is available to make accurate predictions.
7 Ports in California and the East Coast seem to be feeling the impact of the collapse of the housing market most intensely.
The West Coast is taking the biggest hit, though, as radical decreases in volumes are sending facility utilization levels slumping.
8 Project cargoes growing out of the alternative energy movement are proving a boon for many ports.
Officials say that windmills are proving to be a major item. Also generating revenue: the super-sized machinery that helps make major generating plants work.
As for the economy, port officials are saying that they’re seeing a slump but not a collapse. The weak dollar is proving a mixed blessing, sending oil prices soaring but also fueling a new growth in exports from the United States.
“The growth in exports from the United States will result in at least an additional 1 percent growth in GDP,” says Daniel Elder, president of the American Institute for International Steel, in comments that were echoed by ports all over the United States.
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