Americas 1H2023: is port activity accelerating or decelerating?
Kühne Professorial Chair in Logistics, Universidad de los Andes
Maria Alejandra Gomez Paz Fort
The world economy continues to show signs, sometimes contradictory, of both recovery and decline, which extend over time. Uncertainty and volatility have become part of normalcy because of a succession of crises.
The pandemic crisis was a human, social and economic scourge of enormous magnitude at a planetary level, and its effects have yet to completely disappear. Moreover, the health emergency was compounded by the intensity of climate phenomena -such as the recent droughts-, the growing geopolitical tensions, financial stress and the problems of food insecurity and poverty, in addition to the war of Ukraine –which has global implications– among other issues with a clear influence on the course of the world.
Within this context, it is also necessary to consider macroeconomic problems both within countries, as well as global ones.
The monetary policy actions –premiered in some of the latest crises and possibly abused in their application and extension– that have been exercised by the corresponding economic entities throughout the world, although especially in the central countries, are contributing their share of uncertainty. In some cases, the economic signs begin to show improvements, and it is desirable that they are not affected by the recent monetary measures.
International trade maintains its adherence to the ups and downs of the economy. The World Trade Organization, in its latest report, indicates that the 2023 growth in merchandise trade volume would shrink at a lower rate than that of 2022. In fact, the contraction began with a drop in the fourth quarter of last year and was persistent in the first quarter of 2023. In summary, the growth in the volume of world merchandise trade would go from 2.7% in 2022 to 1.7% in 2023, and then rebound in 2024 to 3.2%. This means that the turning point of the trend must be at some point this year.
Port activity, and particularly that of container ports, can act as a leading indicator for trade. It is precisely for this reason that it is important to ask whether the container port activity (#throughput) is accelerating or decelerating. It is also convenient to remember that there is no automatic translation between port activity and #trade and economic activity, since the previous level of inventories works as a buffer in the supply chain that, if positive, reacts to changes in demand originated in consumption or production. However, this does not mean that it is not possible to take advantage of the measurement of changes in container ports to analyze a signal of a possible change in trend.
The following figure shows the change in activity in a very important group of container ports in the Americas, in the first half of 2023 compared to the same period in 2022.
As it is possible to observe, most of the ports show a drop, even up to two digits, measured in all cases in percentage variations. Only the first five ports on the graph show an improvement, while seven express slight or moderate contractions, and the others strong reductions. This could be clearly related to the contraction in the last quarter of 2022 and the beginning of 2023.
It is also interesting to review how the ports behaved compared to the pre-pandemic situation. To do this, the percentage change of 1H2023 compared to 1H2019 is observed in the figure below.
Throughput change in the first half of 2023 compared to the same period in 2022
Change in the first half of 2023 compared to the same period in 2019
We now see that more than half of the sample already exceeds –even widely– the activity of 2019: Brazil, Canada, Colombia (Caribbean), Gulf of Mexico, Mexico, Panama, Peru and Uruguay show significant double-digit growth. However, in other ports the recovery remains delayed, and the results are declining, especially Argentina, Chile and some individual ports in Canada and the USA.
Consequently, it is necessary to review the activity volume figures a little more closely to see if there is an acceleration or deceleration of activity. At the same time, it is of interest to find out if there are traces of a possible trend reversal with respect to the decline started in the last part of 2022, since some signs seem to be auspicious.
Port activity speedometer
For a rapid assessment, the following activity indicators are used, which consist of comparing semester averages to their equivalent in previous periods.
The indicators presented are not intended to lead the economic activity, but they provide a good understanding of the changes that are taking place, using information up to the end of June 2023.
First, the 2023/2022 change is shown, followed by a comparison of 2023 with pre-pandemic times. A sample of countries and different areas of the Americas is presented below, although it is necessary to clarify that the same analysis can be carried out for each terminal, port, country, or different areas of interest.
In the case of Mexico, the first indicator shows a retraction of almost 4% compared to 2022, but a significant recovery over the pre-pandemic. Likewise, when looking at the situation at the end of the first semester, the recovery was higher than the average for the six months. This could be indicating an even more favorable trend.
The West Coast of the United States and Canada exhibits a stronger retraction (almost -20%) compared to 2022, and a softer one (-3.6%) compared to the pre-pandemic. However, the end of the semester already shows growth, perhaps an indicator of a change in trend.
The US and Canada East Coast, on the other hand, is recovering compared to the pre-pandemic era, slightly more significantly than on the other coast, although with a similar value in June than what is shown for the first six months of 2023.
In Panama, a retraction (-2%) is observed compared to 2022, an increase of +20% over the pre-pandemic times, and a closure of similar magnitude in the last month of the semester.
The East Coast of South America (#ECSA, represented by the 3 maritime countries) shows a recovery in all 3 indicators, in this case using data from the first 5 months of each year. A greater acceleration is observed at the end of the semester, which could mean a change in trend.
However, a slightly more detailed analysis also reveals notable differences between countries. To this purpose, it is necessary to observe the following graph regarding ECSA:
The highly varied performance can be clearly tied to the macroeconomic differences that exist between the 3 country cases.
Finally, in the case of the West Coast of South America, there is a strong difference between the results of Chile and Peru, as shown in the following figure.
In summary, although there are still signs of weakness in the evolution of the level of activity, some of the outlined indicators showcase positive signs that could be indicating a possible turning point in the volumes. Likewise, strong differences persist in the behaviour of the different countries and regions.
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