Volume 3 Issue 1.indd - Parsons Brinckerhoff

A New Cyclicality in Container Trade
In summary, during the past few quarters, container trade
has joined the list of cyclical sectors of the U.S. economy,
and done so strongly. Declines in residential investment
have continued unabated, and growth in investment in
non-residential structures has also moved into negative
territory. Long-term, steadily positive, growth in consumer
spending turned sharply negative in mid-2008. Beyond
underlying economic driving factors, drops in import
volumes have also undoubtedly been impacted by supply
chain factors such as drawing down inventories and
changes in sourcing. Finally, export volumes, which had
been increasing during early 2008, have also declined in
the fourth quarter of 2008 and the first quarter of 2009
due to slowing global demand. The result of all of these
factors has led to an unprecedented drop in U.S. container
volumes in 2008 that has continued into 2009.
The good news for GDP growth is that declines in imports,
and the resulting improvement in the trade balance, count
as positives in the calculation of GDP.
After the Recovery: A New Normal
The timing and shape of the economic recovery is the
subject of much uncertainty and debate. The question
here is what will happen to trade volumes, both during a
recovery and thereafter. In the short term, an economic
recovery will lead to a resumption of trade growth,
accelerated by a refilling of goods inventories. It now
seems apparent that this recovery in trade will not occur
until late in 2009, or perhaps in 2010. A specific forecast of
this volume growth is not attempted in this short article.
The important question for longer term planning purposes
is what normal growth will look like after the recovery. The
factors that will determine a new normal include at least
four principal components:
Real Economic Growth
While there is debate about how much the U.S. economy will
grow over the next decade, there seems to be a consensus
that growth rates will be less than those experienced since
the 1990s. For example, the Congressional Budget Office is
projecting long term real GDP growth rates of 2.4 percent,
greater than growth projected by the Blue Chip average,
but less than the projections included in the President’s
budget (see Exhibit 8).
A decline from the 3.0 percent real GDP growth rate of
the past decade and a half to a 2.4 percent rate would
suggest that, all else being equal, U.S. trade import growth
would decline by a similar amount, or a drop of about 0.6
percent. This is a fundamental change contributing to a
new normal.
Exhibit 8: Alternative GDP Growth Forecasts
Source: Congressional Budget Office
• Real Economic Growth
• Investment: Residential and Nonresidential
Structures
• Consumer Spending and Saving
• Sourcing and Supply Chain Factors
17 Vol. 3 • Issue 1 |