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U.S. trade imbalance stretches ability to store cargo in Baltimore, other ports
For executives like Tom Matte, the huge U.S. trade imbalance presents a constant shell game.
A senior manager for an international auto handler, Matte must find storage space for hundreds of Hondas arriving in the bellies of hulking cargo ships from England while shipping hundreds of new Fords to Puerto Rico and the Middle East. Like competitors at ports around the country, Matte struggles to find room for all the imports increasingly outweighing the exports.
"We're trying to get contiguous land, or land as close as possible," to park all the cars, said Matte, the former Baltimore Colts running back who is a senior vice president at ATC Logistics of Maryland Inc. "The state may need to consider building garages [to park shipped vehicles] if the trend continues."
Thousands of imported cars line up near the Patapsco River on the south side of the Baltimore Harbor Tunnel, waiting to be loaded onto ships, trains or trucks. Auto imports to the public port of Baltimore nearly tripled from 1996 to 2003, to 440,000, while exports hovered around 100,000.
Such trends led the Commerce Department to report this week a record $61 billion trade deficit for the United States. The nation imported $161.5 billion in goods and services in February and exported $100.5 billion worth. The deficit eclipsed the previous record of $59.4 billion, set in November.
Trade experts don't expect a reversal any time soon.
"For every six ships coming in from China, only one leaves with merchandise back to China," said U.S. Rep. Benjamin L. Cardin , the ranking Democrat on a key House subcommittee on trade.
Contributing to the imbalance is the U.S. dollar, which while weak against the euro, remains strong against developing countries' currencies such as the Chinese yuan. The strong dollar encourages Wal-Mart Stores Inc. and other retailers to stock inexpensive Asian products, said Peter Morici, a professor in the University of Maryland Robert H. Smith School of Business. Oil and auto imports from Japan and Germany, autos from Korea, and auto supplies from China compound the trade imbalance.
The imports have been a boon to ports, their workers and state coffers - in addition to some less expensive items for sale in stores. But trade experts say the imbalance could result in greater pressure on U.S. manufacturers and jobs lost overseas. Eventually, some retail prices could rise because they'll include surcharges to ship goods or because some goods won't make it through the thicket to store shelves at all.
The import deluge has caused backups at West Coast ports, which threatened to make shipments late last Christmas. Logistics companies say the crunch has pushed some ships to East Coast ports with space available, but delays there could also lead to product shortages and higher costs. Meanwhile, large shippers could squeeze out smaller importers.
"Wal-Mart gets their stuff on board first because they have so many more containers than everyone else," said Dennis Kelly, vice president of international operations for TBB Global Logistics Inc., a Pennsylvania firm that handles imports and exports of food, steel, wood and manufactured goods for small- and medium-sized shippers.
"It's become a lot more difficult to get space on ships than even five years ago, particularly in the peak season," he said. "China, Korea and Japan have gotten so big in supply to the United States, most of it coming to the West Coast, it requires the entire infrastructure to move farther and farther away from the port location."
Ocean carriers used to tack on surcharges in the last couple of months before the Christmas holidays, but now surcharges are lasting longer, said Sam Polakoff, president of TBB.
Baltimore - with an imbalance by value of trade of close to 3.5 to 1 - has avoided backups like those on the West Coast, where the bulk of Asian cargo lands. Los Angeles' imbalance, according to federal statistics, is more than 6 to 1 and Long Beach's is about 4.5 to 1. But as ocean carriers and shippers look for less crowded ports or new entry points for holiday items that begin sailing in over the summer, some trade experts say East Coast ports could face more than an occasional logjam of cars.
John C. Martin, a consultant who has studied the economic impact of ports including Baltimore, said the weak dollar compared with many currencies is not making U.S. goods much more desirable overseas, as expected.
The growth in Asian imports started in the mid-1990s, primarily with a boom in consumer goods such as electronics that were headed mostly to Southern California ports. After the attacks in 2001, importers became concerned about their supply chains and began dispersing shipments to ports such as Savannah, Ga.; New York; and Norfolk, Va., Martin said. As those become busier, Baltimore; Jacksonville, Fla.; and others have opportunity, he said.
To get the cargo he said, Baltimore and others will have to make sure they have the ability to receive it. They will have to have more space at the port and attract large corporate distribution hubs near the port that stow goods that make their way into stores.
Baltimore has made investments in increasing its capacity. It has brought in cranes that can stack containers at its Seagirt Marine Terminal, doubling available space.
Baltimore City officials have set aside waterfront land where retail and residential development, which much of the harbor has become, is prohibited. And state officials have approached officials at General Motors Corp., which plans to close its 70-year-old plant near the public port next month, about conveying its property to the state.
Helen Delich Bentley, a former U.S. representative and consultant to the port of Baltimore, and James J. White, the port's former executive director who left after a row with Transportation Secretary Robert L. Flanagan, advocated reserving land for the future. They have also sought other investment in the port, particularly funds to deepen the channel to accommodate ever larger cargo ships.
Flanagan has said port and transportation officials will continue to explore ways to make better use of the space available and to acquire more land. But, he has said, further land purchases would have to be carefully reviewed because properties owned by the port go off the property tax roles, potentially draining local coffers.