Depressing Month For Sea Container Counts In June 2013

For the fourth month in a row, export container counts are contracting year-over-year – comparing same months in 2012 and 2013, and imports also contracted in June year-over-year.

• Economically intuitive imports are contracted year-over-year, but is still growing year-to-date);
• Exports were again slightly worse month-over-month, and continues to contract year-to-date.

For the month of June 2013, the economically intuitive imports growth decelerated an 4.3% month-over-month, is down 2.5% year-over-year, but up 2.1% year-to-date. There is a direct linkage between imports and USA economic activity – and growth in imports foretells real economic growth.

Exports (which are an indicator of competitiveness and global economic growth) growth decelerated an 4.3% month-over-month, is down 8.1% year-over-year, and down 3.1% year-to-date. Exports are on a negative growth trend line.

There is reasonable correlation between the container counts and the US Census TEU , the volume of a standard 20 foot long sea container. Thus a standard 40 foot container would be 2 TEU.

There is a good correlation between container counts and trade data (the US Census trade data is shown on the graph below). Using container counts gives a two month advance window on trade data.

Inflation Adjusted Year-over-Year Change Imports (blue line) and Exports (red line)

Transport has been languishing with very weak growth.

Caveats on the Use of Container Counts

These are extraordinary times with historical data confused by a massive depression and significant monetary and fiscal intervention by government. Further containers are a relatively new technology and had a 14 year continuous growth streak from 1993 to 2006. There is not enough history to make any associations with economic growth – and we must assume a correlation exists.

Further, it is impossible from this data to understand commodity or goods breakdown (e.g. what is the contents in the containers). Any expansion or contraction cannot be analyzed to understand causation.

Imports are a particularly good tool to view the Main Street economy. Imports overreact to economic changes much like a double ETF making movements easy to see.

Contracting imports historically is a recession marker, as consumers and businesses start to hunker down. Main Street and Wall Street are not necessarily in phase and imports can reflect the direction for Main Street when Wall Street may be saying something different. During some recessions, consumers and businesses hunkered down before the Wall Street recession hit – and in the 2007 recession the contraction began 10 months into the recession.

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Above graph with current data:

Imports of Goods and Services

determines the month-over-month change by subtracting the current month’s year-over-year change from the previous month’s year-over-year change. This is the best of the bad options available to determine month-over-month trends – as the preferred methodology would be to use multi-year data (but the New Normal effects and the Great Recession distort historical data).

Written By: Econintersect LLC