Asia may be shrugging off its worst economic turmoil since the end of World War II, but West Coast exporters and shippers have yet to really benefit.
Shipping officials say Asian demand for exports remains soft at best, and freight rates for outbound cargo are lower than they have been in years.
At the Los Angeles office of Zim American Israeli Shipping Co., Karsten Lemke says it is much too early to assume that things are getting better.
"We're not quite there yet," said Lemke, who heads Zim's West Coast operations and is a director of the Foreign Trade Association of Southern California. "The trend is toward growing exports to the Pacific Rim, but exports are still giving back a negative return (on investment)."
For the first five months of the year, export figures from the adjacent ports of Long Beach and Los Angeles are mixed. While the Port of Long Beach the largest port in the United States has seen a modest rise of 0.3 percent, exports from the Port of L.A. have fallen.
When combined, exports from the two L.A. ports have fallen 2.5 percent from a year ago. Asia routes represent around 80 percent of all container traffic that goes through L.A. ports.
The decline in exports doesn't mean port executives have nothing to do. With the U.S. economy booming and Asian currencies still weak against the dollar, imports from the Far East are projected to rise yet again this year, taking the trade deficit further up with it.
While shipping companies are benefiting from moving cheap Asian goods to the U.S., it isn't enough to offset the anemic export market.
"Exports from Asia to the U.S. are up and rates are up as well," said Rick Ginley, marketing director for Oakland-based APL Ltd., a subsidiary of Neptune Orient Lines of Singapore. APL runs the largest terminal in North America at the Port of L.A., and carries more containers across the Pacific than any other carrier. "But westbound (U.S. to Asia), it's terrible. It's still not making up for how good things are the other way."
Indeed, more empty containers than loaded ones were shipped to Asia from Los Angeles in 1998. That trend has slowed somewhat this year, as Asian demand for goods such as wastepaper and lumber has risen giving rise to optimism among shippers and exporters that better days are coming.
"Since '98, carriers have been doing anything they can to fill their containers," said Port of Long Beach trade analyst Matt Plezia. "These containers have been coming in full and going out empty. But I think it's safe to say we've probably seen things bottom out."
It will take more than a few months of positive data to convince shippers, since the monthly numbers can fluctuate wildly.
"I'm hearing people say they're seeing a little tick up (in exports to Asia). At least there are a few good signs," said Jay Winter, executive secretary of the Steamship Association of Southern California.
Exports shipped from the U.S. to Asia by Mitsui O.S.K. Lines Ltd. rose 3 percent in the first quarter of 1999, according to Jim Galligan, the company's vice president of marketing and pricing administration. He calls the figures "pretty encouraging" given that Mitsui O.S.K.'s exports to the region fell by about 13 percent in 1998. About 30 percent of all the company's exports go through L.A.
"The sense is that (Asia's economies) have come around the corner, that the crisis is being managed. Thailand, Indonesia and Malaysia are starting to come back," Galligan said. "Japan's economy is looking a little better in terms of exports (as well)."
An increase in demand for wastepaper is seen as a leading indicator of U.S. export trends, because it can be obtained in other parts of the world and is refashioned as packaging for goods.
"It's a good barometer," Zim's Lemke said. "And we're sending wastepaper to China, Korea, Malaysia, Hong Kong and Taiwan" as well as Japan.
Lumber companies aren't cheering just yet.
"Actually, in the last five weeks, we've seen some regress" in orders, said Hayden Swofford, the head of the Pacific Northwest Asia Shippers Association, a group of 15 lumber companies. "Looking at our (1999) first-quarter numbers, yes, exports are up 15 to 16 percent year on year. But a year ago was the worst year in 35 years for lumber exporters."
A jump in housing starts in Japan, where 75 percent of the association's overseas business goes, spurred demand for U.S lumber in the first part of the year. Activity rose as bank lending rates in Japan fell to historically low levels amid a massive stimulus program designed to pull the country out of its worst recession since the war. But with land prices expected to keep falling, there is no guarantee that housing construction will stay buoyant.
"We'll have to hang in and see what happens," Swofford said. "(Despite) a lot of stimulus in the Japanese economy, including virtually wiping out interest rates for home buyers, there still is a feeling of great skepticism" that lumber demand will continue.
The rates for outgoing cargo to Asia have fallen dramatically. According to the trade magazine Containerization International, 1999 first-quarter prices for 20-foot equivalent units (TEUs), the standard maritime container measurement, for the outbound Asia routes were 26 percent lower than a year ago.
"Freight rates right now for exports to the Far East are the lowest I've ever seen, and there's no stability, so they'll probably go down," Galligan said. "It's not making me any money, but for a guy shipping goods overseas, this is a good time for it."
Shipping companies are making up the difference by raising container prices for imports. Exporters, meanwhile, are just hoping Asian demand for U.S. goods will rise.
"The (Asian) economies aren't booming, (but) there are small improvements, by increments," said Ginley. "We anticipate 1999 to be a record year for eastbound (Asia to U.S.) container moves, and we have to get the containers to Asia one way or another, full or empty. We'd rather they be full."
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