Moody’s: US ports industry outlook remains stable for 2016

The outlook for the US ports industry is stable for 2016 on the expectation of continued economic growth and a steady rise in US container volume, Moody’s Investors Service says in “Ports – US: 2016 Outlook – Container Volume Growth Supports Stable Outlook.”

“We expect US container volume to grow 3% to 4% in 2016,” says Moody’s Analyst Moses Kopmar. “Although weaker global demand and a strong US dollar have weakened export activity, the US is a net importer with an improving economy, which we believe will support US consumption and drive cargo demand at US ports.”

Moody’s Macroeconomic Board expects the US economy will grow 2% to 3% in in 2015 and 2016, and US container volume typically tracks closely with economic growth.
Additionally, shipping costs are near their lowest levels in recent years, a result of both overcapacity in the container market and low fuel costs.
 

“Overcapacity in the container market continues to depress freight rates, as supply growth outpaces demand growth,” Kopmar says. “While capacity is tighter for landside freight transport, such as truck and rail, competition and excess capacity have pushed down spot rates in these markets as well.”

Despite expectations of container volume growth, several factors temper Moody’s outlook. Among them is a significant build-up of business inventories beginning in late 2014 and increasing further in 2015, which boosted container volume growth this year. As a result, Moody’s anticipates container volume growth will moderate in 2016.

The outlook reflects Moody’s expectations for the fundamental business conditions in the industry over the next 12 to 18 months. The report is part of a series of outlooks on a wide variety of sectors globally published by Moody’s.