 Increasing sping on services may help ease US port congestion |
Source |
American Shipper |
Post Date |
03/17/2021 |
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THE chief economist at IHS Markit, Nariman Behravesh, says the rate of easing US port congestion hinges on how quickly consumers return to sping on services such as travel and entertainment.
Speaking at JOCs virtual TPM21, Mr Berhravesh, says the quicker the US gets the Covid-19 pandemic under control with more people being vaccinated, the earlier the backup of containers and freight in US ports will diminish.
"The pandemic, especially rising infection rates, is directly correlated with port congestion," Mr Behravesh said. Simply put, the longer people feel constrained to stay at home, the longer they will continue to sp money on physical goods, sing more imports to US ports.
"By the second half of the year, well see significant easing of pressure on container traffic and ports, but I dont think well see a lot in the first half," Mr Behravesh said. "People arent going to be that comfor sping on services such as travel and entertainment."
Mr Behravesh doesnt believe the US import surge seen in the second half of 2020 will repeat itself. "The [current] surge wont be sustained," he said. In general, global trade is not accelerating at the pace it did in the late 2000s, when it represented about 25 per cent of global GDP, he said.
However, the US economy will rebound strongly from the recession this year, especially in the second half, with US real gross domestic product (GDP) rising 5.7 per cent in 2021. Mr Behraveshs outlook is for a gradual increase in sping on services by US consumers, reports IHS Media.
That should reduce congestion at US ports and lead to a more normal year in 2022, he said. "Assuming we get half the population vaccinated by the fall, I think thats a big enough change that well start to see improvement. Early in the fourth quarter is what Im looking for."
But he warned that the coronavirus disease 2019 (Covid-19) remains the "starting point" for any conversation on economic growth. "The reality is the virus and its new mutations and the slow rollout of the vaccines are creating some downward risks in the near-term," he said.
The US and China are faring much better than Europe and Japan, which face a second slip into recession as they travel through a sharper "W"-shaped recovery. "The US and China are doing okay in terms of economic activity, but Europe and Japan are not," Mr Behravesh said.
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