Ports and the Economy

Presentation for Management Seminar Unisantos, Brazil

byDr. Veronica Z. Kalich

Associate Professor – EconomicsBaldwin-Wallace College

May 2005

Global Patterns of US Merchandise Trade - Balance

2004 Balance of TOTAL in thousands $USD  

-700,000,000

-600,000,000

-500,000,000

-400,000,000

-300,000,000

-200,000,000

-100,000,000

0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

U.S. Merchandise Trade Balance with the World

  Product Value ($)

       84--NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS

-51,617,584,407

       85--ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP; PTS

-60,145,224,362

       87--VEHICLES, EXCEPT RAILWAY OR TRAMWAY, AND PARTS ETC

-117,940,556,289

       27--MINERAL FUEL, OIL ETC.; BITUMIN SUBST; MINERAL WAX

-186,969,413,088

        All Others -235,062,130,263

 Grand Total -651,734,908,409

U.S. Merchandise Trade Balance With the World in 2004 by Specific Products

http://tse.export.gov/NTDChartDisplay.aspx?UniqueURL=b02fabe11gh5htzoey4yrerh-2005-5-4-10-51-44

Exports and Imports of Goods and Services

0

200

400

600

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1400

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2000

1972

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   20

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   20

01   

   20

02   

2003

2004

$Bil

s.

EXPORTS Imports

Trade Balance

-700

-600

-500

-400

-300

-200

-100

0

100

$Bils.

Deficits with Top Trading Partners of the U.S.

($190.00) ($150.00) ($110.00) ($70.00) ($30.00) $10.00

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

$bils

South America

China

Japan

EU Area

Mexico

Canada

-700.0

-600.0

-500.0

-400.0

-300.0

-200.0

-100.0

0.0Index: 1973=100

80.0

90.0

100.0

110.0

120.0

130.0

140.0$bils.

Trade Deficit

Trade Weighted Value of$U.S.

U.S. Trade Deficit and the Trade Weighted Index of the U.S. Dollar (1973 = 100)

-700.0

-600.0

-500.0

-400.0

-300.0

-200.0

-100.0

0.0

$bils

-20.0

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

%

Trade Deficit

Value of $US

U.S. Trade Deficit and Change in Currency Valuation(1980-2004)

Trade Effects on U.S. Labor Market

0.00

0.02

0.04

0.06

0.08

0.10

0.12

0.14

0.16

0.18

%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

%

Imports as a % of RGDPUnemployment Rate

-10 -8 -6 -4 -2 0 2 4 6 8

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

$U.S. billions

Balance of Trade with Brazil

Ohio Exports to Brazil - 2004  

 

  Product Value ($) Percent

       Transportation Equipment

215,174,257 43.8 %

       Chemical Manufactures

84,831,095 17.3 %

       Machinery Manufactures

73,735,725 15 %

       Fabricated Metal Products

26,276,338 5.4 %

        All Others 90,815,326 18.5 %

 Grand Total 490,832,741 100 %

  Product Value ($)

       84--NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS

1,577,239,378

       27--MINERAL FUEL, OIL ETC.; BITUMIN SUBST; MINERAL WAX

-1,269,218,827

       44--WOOD AND ARTICLES OF WOOD; WOOD CHARCOAL

-1,538,002,188

        72--IRON AND STEEL -2,256,409,615

        All Others -3,807,921,775

 Grand Total -7,294,313,027

U.S. Trade Balance with Brazil - 2004

Virginia Port Authority, VA

Wood pulp LoadingAlabama State DocksMobile, AL

Florida Dept. of Commerce

Salt transferred atPort Newark/Elizabeth, NJ

Hanjin Shipping TerminalPort of Long Beach, CA

Black Falcon Cruise TerminalBoston, MA

Ports as Gateways to Global Trade

Military CargoPort of Tacoma, WA

Economic Impact of Ports• Port Industry accounts for 4 million jobs

• Port-related jobs generate $44 billion in Personal Income, annually

• Port-related incomes supply federal and local government $16.1 billion in total tax revenues

• Port activity accounts for $723 billion annually to GDP

Source 1

Selected World Port RankingTotal Cargo Volume 2003

Rank Port Country Tons*

1 Singapore Singapore 347,694 FT

2 Rotterdam Netherlands 326,958 MT

4 Hong Kong China 207,612 MT

5 South Louisiana United States 180,493 MT

6 Houston United States 173,320 MT

18 New York/New Jersey United States 132,438 MT

36 Tubarao Brazil 77,621 MT

42 Itaqui Brazil 67,591 MT

46 Long Beach United States 62,816 MT

47 Santos Brazil 60,077 MT

~

* MT = Metric Ton FT = Freight Ton

Role of Ports in Economic Development

• Ports are a major determinant of industrial plant location

• Waterfront sites provide low-cost transportation of finished goods and raw materials

• Continued U.S. economic growth will fuel demand for imports

• Port capacity is not expected to keep up with the growing activity– Underinvestment in port and intermodal infrastructure

•Waterborne commerce is the greenest form of transportation.

•Typical season, ships use 9.6 million gallons of fuel to deliver roughly 8 million tons of iron ore to Lorain

•Were that trade to switch to trains, locomotives would burn more than 14 million gallons of fuel and their emissions would double that of ships

•Ships burn less fuel and produce fewer emissions than trains or trucks

Ships Benefit Ohio's Environment

Port Congestion – Infrastructure Problem

• Ports can’t expand (ie. California)– Infrastructure costs are beyond the state’s fiscal

capacity/resources– Anti-expansion sentiments

• Ports come with traffic problems and pollution

• Rising Fuel costs affect truckers hauling loads– “waiting isn’t worthwhile”

• Few legislative responses– Focus is more on increased security– Use of alternative deep-water ports

U.S. Waterborne Foreign TradeTop 10 Trading Partners

Containerized Cargo2004

*Twenty-Foot Equivalent Units Source 3

COUNTRIES TOTAL EXPORT IMPORTGRAND TOTAL 23,850,523 8,045,045 15,805,478 Top 10 Countries:

CHINA 7,351,341 1,390,714 5,960,627 JAPAN 1,608,354 836,358 771,996 HONG KONG 1,452,548 313,757 1,138,791 SOUTH KOREA 963,492 448,618 514,874 TAIWAN 928,553 340,454 588,099 GERMANY(W) 673,034 190,349 482,685 BRAZIL 654,260 177,836 476,424 ITALY 612,277 132,151 480,126 THAILAND 525,646 114,833 410,813 INDIA 447,165 148,118 299,046

TEU's (Actual)

Top 10 U.S. Ports Ranked by Value of Cargo

Foreign Trade (2003 - $Mils.U.S.) Rank Port Exports Imports Total Foreign

Trade

1 Los Angeles (CA) $16,865 $105,186 $122,050

2 New York/NJ $24,303 $ 76,873 $101,176

3 Long Beach(CA) $16,865 $ 78,700 $ 95,863

4 Houston (TX) $21,439 $ 28,454 $ 49,893

5 Charleston (SC) $13,375 $ 26,000 $ 39,375

6 Hampton Rds(VA) $12,248 $ 20,687 $ 32,935

7 Tacoma (WA) $ 5,203 $ 21,129 $ 26,332

8 Baltimore (MD) $ 5,686 $ 20,270 $ 25,956

9 Oakland (CA) $ 7,762 $ 17,381 $ 25,144

10 Seattle (WA) $ 5,687 $ 17,389 $ 23,077

Source 2

Port and Intermodal Chokepoints

Problem Spots - 2004

Forecast

• Underinvestment in port and intermodal infrastructure – By 2020, its predicted that the U.S.

transportation system will handle cargo valued at more than $28 trillion

• Continued U.S. economic growth will fuel demand for imports– Port capacity is not expected to keep up with

the growing activity

Source 3

Forecast

• China’s economy (GDP) expected to double by 2010

• Restrictive labor practices in the US will hinder productivity growth at the ports

• Chokepoints between the ports and inland transportation will stall transfer of cargo

• Without a coherent expansion plan for transportation INFRASTUCTURE PROBLEMS will continue

Source 3

Possible Solutions• Financing Improvements

– Improve rail and highway (inland modes of transportation)– U.S. public ports have already made advances– Expected investment: $1 billion each future year

• Public/Private Partnerships• Involving all stakeholders

– Carriers, ports, truckers – railroads – Government (state, local and Federal)

• Insourcing manufacturing – in North America • Train more workers

Source 1