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Transports Signal Economic Recovery

America may not make as many goods as it used to, but it's moving goods around at a pace not seen since before the recession.

AP

"We're almost back to 2007 levels," says Richard Steinke, Executive Director of the Port of Long Beach. "We thought we might be 2012-2013 before we got there."

In October, the port, along with the neighboring Port of Los Angeles, saw container traffic rise a combined 18 percent. While exports rose on the L.A. side and imports slowed, it was the opposite in Long Beach.

"Empties are up significantly," says Steinke, referring to empty cargo ships heading out, up 51 percent in October. "People are wanting those containers back in Asia, filling them with goods, to import them to the United States."

It's hard to find any bad news in what's happening in transports.

"Business has been surprising and good in 2010," says Kathryn McDermott, Deputy Executive Director for Business Development at the Port of Los Angeles.

Last month, A.P. Moller-Maersk, the world's largest operator of container ships, predicted a $5 billion profit this year, a new record. The American Trucking Association says tonnage in October grew six percent, showing "a little bit of life in this economic recovery," according to ATA Chief Economist Bob Costello. UPS's average daily volume grew five percent last quarter, it grew six percent at FedEx.

The Journal of Commerce reports that heavy truck orders in September were up 37 percent from a year ago, and trailer orders nearly tripled. But many of these purchases are not to add to capacity, but to replace old equipment. And then there are the old drivers. The L.A. Times reports that the trucking industry needs to hire 200,000 workers in 2011 in the face of a wave of retirements.

Morgan Stanley says tight supplies "leave the supply chain vulnerable to favorable shocks," and it favors railroad stocks like Canadian National, CSX, Norfolk Southern, and Union Pacific.

Symbol
Price
 
Change
%Change
CNR
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CSX
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FDX
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NSC
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UNP
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UPS
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Still, McDermott at the Port of Los Angeles is only predicting growth of three to six percent in 2011, as housing, confidence, and jobs remain big issues. "We're really cautious," she says.

There's usually a lull at the ports this time of year, as holiday goods have already arrived. Things don't usually pick up again until after the Chinese New Year. But this year, that holiday is earlier, the first week of February.

Any lull may be brief, as manufacturers rush to get goods shipped before workers take the holiday off in China. Richard Steinke at the Port of Long Beach is waiting to see what happens. "I think the next three to four months will be critical," he says.

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