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June29, 2015

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4 THE JOURNAL OF COMMERCE www.joc.com Editor's Letter Mark Szakonyi The Journal of Commerce (USPS 279 – 060), ISSN 1530-7557, June 29, 2015, Volume 16, Issue No. 13. The Journal of Commerce is published bi-weekly except the last week in December (printed 26 times per year) by JOC Group Inc. 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105. Subscription price: $344 a year. Periodicals postage paid at Newark, N.J., and additional mailing offices. © All rights reserved. No portion of this publication may be copied or reprinted without written permission from the publisher. POSTMASTER: Please send address changes to The Journal of Commerce, Subscription Services Department, 2 Penn Plaza East, Floor 12, Newark, N.J. 07105-2257. JUNE 29.2015 EXECUTIVE EDITOR, THE JOURNAL OF COMMERCE AND JOC EVENTS Chris Brooks 973.776.7818 christopher.brooks@ihs.com MANAGING EDITOR Barbara Wyker 973.776.7817 barbara.wyker@ihs.com EXECUTIVE EDITOR, JOC.COM Mark Szakonyi 202.872.1234 mark.szakonyi@ihs.com SENIOR EDITORS Joseph Bonney, Finance and Economics 973.776.7809 joseph.bonney@ihs.com William B. Cassidy, Trucking and Domestic Transportation 202.872.1228 bill.cassidy@ihs.com Bill Mongelluzzo, Trans-Pacific 562.428.5999 bill.mongelluzzo@ihs.com Greg Knowler, Asia +852 3975 2647 greg.knowler@ihs.com ASSOCIATE EDITOR Reynolds Hutchins 202.572.1487 reynolds.hutchins@ihs.com EDITOR-AT-LARGE Peter T. Leach, Trans-Atlantic 212.755.0940 peter.leach@ihs.com RESEARCH EDITOR Marsha Salisbury 973.776.7828 marsha.salisbury@ihs.com ECONOMIST Mario O. Moreno 973.776.7850 mario.moreno@ihs.com TRADE ANALYST, JOC.COM Keith Bucco 973.368.3552 keith.bucco@ihs.com SENIOR CONTENT EDITOR Alessandra Gregory Barrett 860.248.5238 alessandra.barrett@ihs.com SPECIAL PROJECTS EDITOR, ASIA Annie Zhu +86 (21) 60396986 annie.zhu@ihs.com SENIOR DESIGNER Sue Abt, 973.776.7825 sue.abt@ihs.com DESIGNER Bryan Boyd, 973.776.7827 bryan.boyd@ihs.com PUBLISHER Tony Stein 770.295.8809, tony.stein@ihs.com SALES Cindy Cronin, Strategic Account Manager Southeast, Gulf, Canada sales, 954.551.8305 Zachary Gorman, Account Executive Northeast sales, Classifieds/Reprints/Copyrights 973.776.7820 Jennifer Mallinger, Account Executive Midwest, West Coast sales, 630.210.6827 Ria Van den Bogaert, Sales Representative Europe, Middle East sales, +32 2 569 8905 Bon Kwok, Sales Representative Asia sales, +852 31707373 Michihiro Kawahara, Sales Representative Japan sales, +81 3 3212 3671 For Magazine Subscription Customer Service: www.joc.com/help 2 Penn Plaza East, 12th Floor, Newark, N.J. 07105 973.776.8660 • 800.952.3839 MANAGING DIRECTOR, MEDIA AND EVENTS, IHS MARITIME & TRADE, Rhiannon James SENIOR DIRECTOR, CONTENT, IHS MARITIME & TRADE, Peter Tirschwell DIRECTOR, JOC AND RAILRESOURCE, IHS MARITIME & TRADE, Amy Middlebrook DIRECTOR, IHS MARITIME & TRADE, Julia Murphy MANAGER, PRODUCTION, Carmen Verenna MARKETING PROGRAMS MANAGER, PIERS AND JOC, Jesse Case ©2015 The Journal of Commerce — All Rights Reserved For more information, visit our website, www.joc.com. When it came to influencing the U.S. maritime container flow, West Coast longshoremen owned 2014 early 2015. The standoff with water- front employers crippled West Coast container traffic and sent surges of volume through Canadian and U.S. East and Gulf Coast ports. But with labor relations gener- ally better despite some hiccups over details of the five-year agreement finalized in late May, shippers should look not to the docks but to a stately white building in Washington, D.C., for an idea about how the rest of the year will shape up. How aggressively the U.S. Fed- eral Reserve raises interest rates this year likely will determine how much U.S. containerized imports rise and exports fall. The speed and scale with which the Fed raises inter- est rates will determine how much stronger the U.S. dollar becomes. For importers, the stronger dollar — up approximately 18 percent from last year — has been a boon, because it's spurred stronger consumer spending. Those tailwinds for import- ers could recede next year, though, because higher interest rates will make it more expensive for Ameri - cans to borrow money, restraining consumer spending, JOC Economist Mario Moreno warns. He expects t he i n f lat ion-adju sted , t rade - weighted value of the dollar to rise 4.2 percent by the first quarter of 2016, before declining 12 percent over the next 10 years to 2025. In the meantime, U.S. imports are surging. Inbound containerized volume rose 4 percent year-over-year in the first four months of this year despite January's 11 percent plunge, according to PIERS, a sister product of The Journal of Commerce within IHS Maritime & Trade. Because of the strong dollar and better-than- expected first-quarter economic performance, Moreno has upgraded his growth forecast for imports to 6.3 percent, from 4.5 percent early this spring. For exporters, the situation has been the opposite, and weakening global demand is only exacerbating their woes. Containerized exports fell 8 percent in the first four months of this year compared to the same period in 2014, according to PIERS. Moreno forecasts export volume will end the year down 5.8 percent from 2014, which was hardly a stellar year, either. "If you have a backdrop of weak global demand and superimpose that on the strong dollar, that means not only are (U.S. exporters) losing competitiveness relative to other countries, but (they) are doing so in a n env iron ment where t he demand for imports in other coun- tries is already weak," Mulraine Millan, deputy head of research at TD Securities, said at a June 12 event in Washington. When global demand recov- ers in 2016, U.S. containerized exports will rebound, rising 7 per- cent compared to this year, Moreno said. But volume will still be down 1.5 percentage points from 2013's high-water mark, he said. For shippers, figuring out just how fast Fed Chair Janet Yellen will raise interest rates is as difficult as it was to discern just what was holding up negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association. Millan and Moreno, along with most econo - mists, expect a gradual acceleration. Part of the reason the Fed hasn't raised rates is concern over the negative impact on exports, Millan said. How fast exports fall over the coming months could spur the Fed to restrain itself. In a larger sense, the change in the reins of control of the future of U.S. maritime ocean container trade — from the fists of muscular dock- workers to bureaucrats clutching briefcases — is a reminder that so much is out of shippers' hands. In that, nothing changes. JOC Waiting on the Fed

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