Shippers in the Jones Act trades will see only a few changes in 2010.
In Puerto Rico, the effects of the major philosophical shift from public sector employment to private sector development by the commonwealth government will bring unemployment down but will also improve the health of the overall economy as private sector jobs are relatively more efficient.
The Puerto Rico domestic market peaked in 2004 with 879,908 TEU containerloads. Since then, the island economy has experienced steady shrinkage in GDP and a rising cost of living, resulting in classic stagflation that was at its worst during the past 16 months.
For the calendar year ending December 2009, the market will be in the range of 578,532 TEUs, or a decline of 34 percent off the 2004 peak. Some carriers have adjusted capacity where service was not impacted. Others have maintained capacity to protect services and schedule integrity that shippers value.
2010 will bring more predictable volumes, probably at unit rates reflecting only a slight increase over those prevailing in 2009. Carrier cost inflation, including rising fuel prices, will again cause all carriers to re-evaluate how they serve this market.
In Hawaii, the economic situation has been less difficult but was quite severe during 2009. Carriers are again seeing fuel costs rise. As West Coast contract longshore man-hours have declined, carriers have had to fund larger unit charges for pension and welfare commitments.
The economies of Hawaii and Guam should improve this year -- Hawaii as tourism recovers, and Guam as the result of upcoming military commitments.
Alaska, an “energy state,” remains steady in the boat. The local effects of the recent recession were only felt during the most recent nine months. Recovery should be fairly swift, buoyed by increased confidence in the future of a proposed North Slope Gas Pipeline project.