The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

We have downgraded our US 2012 outlook to 1.6% from 2.4%. Incoming data have been poor, but not recessionary. We see consumer activity continuing to grow at a weak pace, though business investment should continue to outperform. There are also major downside risks to the 2012 and 2013 outlook, with external concerns over the health of the European and Chinese economies, and domestic concerns over the expiry of tax cuts and the reduction in government spending, all of which would have negative knockon effects on port volumes.

We have revised down our expectations for the external sectors contribution to GDP growth over the 2011/12 period, and are anticipating a flat contribution for 2011 and a 0.2 percentage point (pp) drag in 2012. We have pared our 2012 real export growth forecast to 5.0% from 8.0%. This reflects the deteriorating external environment, particularly the diminishing prospects for European demand (our 2012 eurozone growth forecast was cut in September to 1.2% from 1.7%). On the flip side, import growth is set to fall alongside the ailing US consumer, to 5.0% in 2012 (compared to the previous forecast of 8.2%).

Key Industry Data

- At the port of Los Angeles (LA) we forecast 4.8% year-on-year (y-o-y) growth in total tonnage in 2012, to reach 64mn tonnes.

- At the East Coast port of New York/New Jersey (NY/NJ), growth is forecast to be 3.88% y-o-y in 2012, to reach 153mn tonnes.

- We expect LA to record growth of 1.02% in twenty-foot equivalent unit (TEU) throughput in 2012 to reach 7.98mn TEUs.

- We expect NY/NJ to record a 3.2% increase in TEU throughput in 2012, to reach 5.02mn TEUs.

Key Industry Trends

Savannahs Dredging Dream Kept Alive, But Delays Could Prevent It Being Fully Prepared

In 2014 BMI believes the Port of Savannah is a step closer to its dream of dredging the Savannah River after a South Carolina environmental board unanimously reversed its ruling to block the project. The ports shallow depth has been a source of concern as it could prove a major impediment to its ability to capitalise on the Panama Canals expansion, which is due for completion in 2014. BMI maintains its view that Norfolk and Charleston are the East Coast facilities best placed to take advantage of the expansion, due to the fact that they will be prepared in time for 2014. However, the possibility of a future dredging project for Savannah presents upside risks to our throughput forecasts for the port over the medium term.

Miamis Dredging Project Could Face Further Delays As Port Rushes To Prepare For 2014

Despite the fact that the Florida state governor has pledged to ensure that the Port of Miami has funding for its dredging project, BMI believes that the facility still has some hurdles to clear before it can begin works. A group of environmentalists have challenged the project, saying it threatens the Biscayne Bay. The challenge means that the port, which is already lagging behind neighbouring facilities in the dredging stakes, could face further delays.

Horizon Lines Settles Price-Fixing Claim, More Choppy Waters Ahead

Beleaguered US container line Horizon Lines looks set to end 2011 on a positive note, having settled all antitrust claims against it by major shippers on the US-Puerto Rico route. BMI cautions however, that with container shipping rates still on the decline and volumes not recovering, the lines difficulties are far from over. BMI notes that the fine resulting from the settlement will further add to the woes of the line, which is already faced with a difficult operating environment.

Risks To Outlook

BMI believes the main risks to our outlook for US container shipping are on the downside. A bearish consumer outlook, combined with the withdrawal of shipping lines from the transpacific route and cuts to federal funding for port projects mean that growth in the box shipping sector could be slower than expected.

On the dry bulk side there is upside potential from the fact that we expect the US to become a net exporter of coal over the medium term as domestic demand slows and Asian demand remains strong. We are already seeing the development of new port facilities on the west coast, such as SSA Marines Gateway Terminal, in order to cater for an expected increase in coal shipments.