• Home
  • About
  • Contact

The Private Business Owner

An Online Publication by Generational Equity

  • M&A
  • Finance
  • Human Resources
  • Operations
  • Sales & Marketing
You are here: Home / In the News / U.S. Port Activity Is Positive in May

U.S. Port Activity Is Positive in May

June 30, 2011 By Carl Doerksen

As you all are aware, pundits and pollsters for the past three to four weeks have been focusing on the fact that the economy appears to be stalling. Although growth has slowed recently, some economists are indicating that the real culprit behind this may not be general economic malaise but the disruption the March tsunami in Japan caused. At the time, the human suffering was clear. Now, the longer-term effects of supply chain disruptions are becoming apparent. This is chiefly impacting manufacturers in the U.S. that source parts from Japan.

So it was somewhat surprising to learn that despite the tsunami, the western ports in the U.S. continued to show growth in May. As I have discussed before, port activity – both imports and exports – are very good leading economic indicators. Goods entering the country indicate that consumption is increasing. Products exiting indicate that manufacturers are ramping up.

Last year was a solid year of growth in port activity and so far this year, this has continued. The nation’s two busiest ports – Los Angeles and Long Beach – experienced 10% and 6% growth in shipments during the first quarter of this year respectively. Together, they handle more than 40% of the nation’s Asian imports and rank as the sixth-busiest container ports in the world, making them an important barometer of the strength of the overall U.S. economy.

Given all the recent worry about the economy slowing, analysts were concerned that we would see a decline in port activity in May. However, when the data was released, it turned out to be positive. Even though shipments only increased 1% in May 2011 when compared to May 2010, most experts were not too concerned, as quoted in the Los Angeles Times:

“‘The fact that the numbers are up over a very strong 2010 is a good sign,’ said John Husing, whose Redland, CA. firm, Economics & Politics, tracks international trade’s effects on the Inland Empire.”

The reality is 2010 was an incredibly strong year for both ports. Imports and exports were booming. So a 1% increase in May 2011 over May 2010 is actually positive – especially when you consider the impact the Japanese tsunami had on suppliers. The downside to just-in-time delivery for many industries became apparent in the four to six weeks following the March 11 tsunami. As quoted in the LA Times:

“Katherine McDermott, deputy executive director for business development at the Port of Los Angeles, said, ‘One of the things we’re particularly pleased with is that we saw improvement even though May of 2010 was a pretty strong month.'”

I think it is vital that we keep this steady stream of economic news in perspective. We need a longer-term view than simply one month’s employment data (May was considered a bad month since only 54,000 jobs were created). Because despite shipments only growing by 1% in May, year-to-date traffic at the Port of Los Angeles is up almost 6.6% to more than 3.1 million containers. At the Port of Long Beach, trade for the first five months of the year is up 6.1% to about 2.4 million containers. Does that sound like a double-dip recession to you?

As we have discussed before, economic recoveries do not move upward in an unending parade of positive data points. Recoveries are not smooth, they hiccup and sputter and sometimes just don’t feel that good to us. We will have two to three months of good economic news followed by a couple of months of bad economic news. That’s unfortunately how these recoveries work.

The amazing thing about humans is that we quickly forget the bad stuff that happens to us and focus on the positive. This is great to do overall, but it is surprising to me that so few of us recall the pain of past economic recoveries. Go back and look at the data and you will see that this recovery, since we are only two years removed from the end of the worst recession ever, is moving along at probably the best pace we could hope for. Short-term glitches such as the very real impact to the world’s economy caused by the tsunami in March sure don’t help!

© 2011 Generational Equity, LLC All Rights Reserved

Share this:

  • LinkedIn
  • Twitter
  • Facebook
  • Reddit
  • Pinterest
  • Email
  • Print

Filed Under: In the News Tagged With: economic history, japan tsunami, key economic indicator

About Carl Doerksen

Carl Doerksen is the Director of Corporate Development at Generational Equity.

The Private Business Owner – A Generational Equity Blog

The Private Business Owner is an online publication sponsored by Generational Equity. PBO aims to provide useful tips and information that will improve both the lives and businesses of entrepreneurs, as well as provide valuable insight into the company exit process through bi-weekly M&A Digests.
  • Learn more about Generational Equity

Set Yourself Up For Success

To help business owners become more informed, we've created free, valuable whitepapers to help you as you embark on your jouney.

Start learning today!

  • How To A Build A "Buyer Ready" Business
  • 5 Common Mistakes To Avoid When Selling A Business
  • Uncover Why Investors Are Motivated To Buy Your Business
  • Exit Planning Basics: What You Need To Know Before You Start
  • Everything You Need To Know About The Evaluation
  • How To Find Buyers For Your Business
  • Unlock the 4 Secrets To A Successful Business Sale
  • Ultimate Glossary of Must-Know Terms If You're Selling A Business
  • Acquisition Case Study of Johnston Enterprises: A Novel Split Pays Off

© 2021 Generational Equity. All rights reserved.      General Disclaimer / Privacy Policy     

loading Cancel
Post was not sent - check your email addresses!
Email check failed, please try again
Sorry, your blog cannot share posts by email.