The record pace of cargo moving through the Port of Charleston is expected to slow early next year as tariff uncertainties, a manufacturing slowdown and the Chinese New Year disrupt containerized trade.
Cargo shipments at the port were running 5.3 percent ahead of projections through November. December should be another strong month with a slew of Chinese freight shipped ahead of schedule to beat now-delayed U.S. tariffs that were to take effect with the new year.
That surplus will likely evaporate in the months ahead, said Jim Newsome, president and CEO of the State Ports Authority.
"We use the analogy that we're kind of like squirrels — we've been storing up nuts," Newsome said of the port's early cargo gains to offset leaner times.
The ongoing trade battle between the U.S. and China — the port's biggest trading partner — is one reason for concern. With so much cargo shipped early and warehouses straining with inventory, it's not clear how much more is possible for the early months of 2019. It's also possible the 90-day delay in tariff implementation will create more cargo scheduling anomalies.
"The whole tariff thing has created a lot of uncertainty," Newsome said.
There also are signs that manufacturing — a cornerstone of the Palmetto State's economy — is slowing.
A manufacturing index compiled by the Federal Reserve Bank of Richmond fell by a record 22 points this month. The index — which covers manufacturing activity in South Carolina as well as four other states and Washington, D.C. — was weighed down by drops in new orders and shipments, which hit their lowest reading since April 2009.
"Tariffs were a significant concern noted by manufacturers, as they were believed to raise costs of raw materials, thereby raising prices and lower demand," the Fed's Fifth District bank in Richmond noted in this month's "Beige Book" report of economic conditions.
Fed banks in other districts are reporting similar manufacturing declines.
There are other warning signs. FedEx this month slashed its profit forecast on expectations of fewer shipments worldwide, saying the peak of global growth has passed. The U.S. Purchasing Managers Index, a leading indicator of manufacturing sector strength, fell to its lowest point in 13 years this month.
All of this is taking place as the global shipping industry prepares for the annual slowdown associated with the Lunar New Year, which is on Feb. 5. Factories in China typically shut down for weeks for the holiday and the month in which it falls is typically one of the Port of Charleston's slowest.
One bright spot that might counter some of the expected slowdown is BMW's plan to boost shipments of partially assembled cars in containers from its manufacturing campus in the Upstate. Starting in January, Newsome said, the automaker "will be ramping up a program to Rosslyn, South Africa, and starting a shipment program to China and Thailand."
The number of BMWs shipped in cargo boxes — called semi-knocked down vehicles — has risen even as exports of finished vehicles has fallen in the months after the tariff war started.