The economy performed very well in the third quarter and expectations were that the growth would continue into the fourth quarter. New orders were placed based on this optimism - just prior to the government shutdown which caused the economy to put the brakes on. Chinese imports of clothing, textiles, footwear, furniture and toys jumped almost 25 percent in December. This capped an otherwise mediocre year for imports from China, which rose less than one percent in 2013.

Container Exports

Despite the 5.7-percent rise in container exports in December, 2013 container export volumes in every month since June were below those for each of the previous three years. December's increase followed a dramatic drop of 15 percent in November and can be attributed to increased shipments for holiday sales. December's container exports were 16.7 percent lower than December a year ago. Of the top 25 trading partners tracked in this index, only three countries showed growth in container exports from the U.S. in 2013. Economic conditions deteriorated in the Asian region significantly, curtailing exports to those countries, especially China, our largest trading partner outside North America. Overall, ocean container exports declined 10.8 percent in 2013.

The market for American goods showed very few signs of strengthening in 2013, resulting in the worst year for container exports since the beginning of our index data in 2010. Other world economies are facing slow economic growth similar to ours, and discretionary purchases of the types of general cargo goods shipped in containers drops off, just as it does here in the U.S. So while U.S. exports overall rose in 2013, largely on the strength of oil and staple foods, container exports did not perform well.

Container imports made a big climb in December, rising 10.7 percent over last December and soaring 17.7 percent from November. The December climb was not enough to reverse the trend for all of 2013 though; container imports for the year were only 0.8 percent higher than they were in 2012. About half of the 25 trading partners included in this index shipped fewer containers to the U.S. in 2013. Wholesale, retail and manufacturing inventories have been building steadily since 2010 and are now higher than they were prior to the recession. The Federal Reserve announced that it will begin trimming its bond purchases in January to phase out quantitative easing. One of the major impacts will be a rise in interest rates that will make those inventories more expensive to hold. This should have a negative impact on future orders placed for import.

Overall Picture

By most measures, the economic health of many sectors of the economy improved in 2013, but not so for the ocean container shipping sector. GDP was steady in the first half of the year and up significantly in the third quarter, but fourth quarter numbers are expected to be somewhat weak. The good news: unemployment was down, housing sales and new starts continue to make gains, and manufacturing has been slowly expanding. What has not changed much is the mind of the consumer. Although there have been small gains in real wages, consumers are not loosening their purse strings and spending. New jobs are not growing at a rate sufficient to cover population increase and much of the employed population is underemployed, having resorted to taking part-time jobs, or positions at levels lower than the ones they lost during the recession. The legion of people who are dropping out of the job market (and therefore not measured in unemployment) is growing as the labor participation rate falls to near-historic lows. Consumer confidence has waned during the year. Container imports depend on these consumers, and the numbers for 2013 reflect the mood of those consumers. Trying to predict 2014 is complicated. While the general economy will continue to strengthen, it may take some time for ocean container imports and exports to follow suit. The struggle to draw down inventories in the first half of the year should curb new orders placed overseas, negatively impacting imports. Exports, on the other hand, depend more on how the rest of the world is faring. China's economy, as well as the economies of other Asian trading partners, has been picking up steam lately which should translate into higher exports to those countries. The Americas were the strongest trading region in 2013, and the growth rate for inter-Americas trading is expected to increase. In fact, Maersk announced in early January 2014 that it was resurrecting the SeaLand branding to launch a new regional shipping firm that will service ports in the Americas beginning in 2015. As we continue to climb out of the hole we fell in as a result of the recession, 2014 will be characterized by slow, uneven growth. Barring unforeseen events, the pace should pick up as we move through the year.

Source: Cass Information Systems / INTTRA