Container ships steamed into West Coast ports last month after the end of a labor dispute. And while the resulting surge in imports may be short-lived, it could still depress first-quarter growth — especially when combined with a smaller gain in exports that underscores America's role as the biggest ship in the waters of the global economy.
The arrival of new vessels at West Coast harbors, as well as the berthing of ships that were delayed because terminals were congested during the labor talks, boosted container shipments as much as 32% on a year-over-year basis.
The California ports of Los Angeles, Long Beach and Oakland, as well as those in Seattle and Tacoma, Washington, saw impressive increases in the number of off-loaded containers.
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Imports of fully loaded containers into the Port of Los Angeles jumped a record 69.5% last month from February. Long Beach showed a 55.3% surge, also the highest since data began in 1995. The combined volume of imported containers into the ports of Seattle and Tacoma were the highest in records to 2008.
The cargo surge wasn’t limited to the West Coast. East Coast cargo volumes in March rose 28% over the same month of 2014 at Savannah, Georgia, to set a record, and gained 14% at Charleston, South Carolina.
The volume of exported containers climbed 10.4% and 15% at Los Angeles and Long Beach, respectively.
"The improvement in containers handled, a proxy for trade activity, was largely the result of more inbound containers," according to Neil Dutta, head of U.S. economics at Renaissance Macro Research in New York. "Outbound containers bounced, but remain weak, a sign that the strong dollar and weak global economy have taken a toll on U.S. export activity."
Dutta projects that trade may have reduced first-quarter gross domestic product by about 1 percentage point, "with the risk that the drag is even bigger" after a similar cut in the final three months of 2014.
The last time net exports subtracted at least a percentage point from GDP in consecutive quarters was 1998. Economists see the first quarter growing at a 1.4% annualized pace, according to a Bloomberg survey conducted April 3 to April 8.
While some of the drag from trade will be mitigated by a pickup in inventories, "we're not seeing that yet," said Dutta.
The trade data, and the fact that consumers did take a breather after a roaring final three months of 2014, likely made for a weak first quarter. That may be about to change. "I think focusing on domestic demand is more useful," Dutta said. "Trade and inventories are the two most volatile components in the GDP accounts."
The first-quarter slowdown in household spending notwithstanding, real final sales to domestic purchasers — GDP minus exports and inventories — averaged an annualized 3.6% in the previous nine months, the strongest such period since 2005.