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Aug.7, 2017

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INTERNATIONAL MARITIME IMPORTING | EXPORTING | PORTS | CARRIERS | BREAKBULK | GLOBAL LOGISTICS THE JOURNAL OF COMMERCE 17 By Reynolds Hutchins US AUTOMAKERS ARE keeping plants closed longer during regularly scheduled inter- missions this summer because of declining auto sales — a move expected to accelerate the decline of vehicle exports and imports of auto parts. The shuttering of many plants for three weeks and more, in contrast to the tradi- tional break of one or two weeks, bodes poorly for the country's third-largest export and its second-largest import, along with the ports and carriers that depend on them. Manufacturers use the summer break to perform routine maintenance and keep inventories in check. Analysts have said there will not be any reprieve for automakers or their part suppli- ers this year, even after operations rev back up this month. Last year, US vehicle sales were up less than half a percent, auto parts imports declined by a third of a percent, and roll on, roll-off (ro-ro) passenger vehi- cle tonnage increased just 3.6 percent after declining double-digits in 2015, according to data from PIERS, a sister product of The Journal of Commerce within IHS Markit. "Demand is not going to be strong enough this year. Auto sales are actually fall- ing this year, and I'm going to say auto parts imports will fall as well," IHS Markit Senior Economist Mario Moreno said. US impor ts of auto pa r ts slipped 1.9 percent year over year in the first half to 478,220 TEU, according to PIERS. Not everyone will feel the heat this summer, though. A bust for automakers is a boom for the automotive aftermarket, which imports replacement parts and accessories for vehicles. Healthy auto parts imports from that sector could help stabilize what has become an increasingly unsteady trade. The largest automakers in the United States have been reluctant to openly discuss the factory intermissions planned for this summer. One major manufacturer told The Journal of Commerce under the condition of anonymity, however, that factory workers at its primary vehicle assembly plant "could be out for three weeks, some out for more." Officials at ports with strong ties to the auto industry told The Journal of Commerce they are still not sure what sort of impact the longer summer break will have on cargo volumes, either vehicle exports or auto part imports. "We have not felt any decline," said Richard Scher, spokesman for the Port of Baltimore, the nation's No.1 automobile port. Scher said that the outlook for 2017 is also positive, adding: "Through May of this year, we are currently up 2 percent from last year at this time." Other port officials were less confi- dent. "We'll have a slowdown this summer because some of the premium auto manufac- turers are doing some model changeovers, specifically BMW," said Jim Newsome, president and CEO of the South Carolina Ports Authority. About 70 percent of the vehicles BMW makes at its Greer, South Carolina, plant are sent to foreign markets through the Port of Charleston. Newsome said, however, that he was not sure what sort of impact the BMW plant's summer US AUTO TRADE SHIFTS TO LOW GEAR Factory closures extended this summer as demand for new vehicles decelerates "Auto sales are actually falling this year, and I'm going to say auto parts imports will fall as well."

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