The Port of Vancouver is anything but immune to the roller coaster trade war between the U.S. and China.
Continuing trade tensions have weighed down the stock market, heightened concerns about a potential recession and even sparked worries the National Zoo in Washington, D.C., could lose its prized pandas when a 20-year lease with China ends in December 2020.
The port has seen the dollar value of cargo traded with China rise and fall. In May 2018, the Port of Vancouver handled more than $42.3 million of commodities and products traded between the U.S. and China. In May 2019, the dollar figure plunged to $418,900, more than a 99 percent drop.
The Port of Vancouver has not seen a steady decline in U.S.-China trade. In March, the port moved $96.8 million of cargo with China, its biggest month for Chinese trade since January 2018.
November 2016, the same month Donald Trump was elected the 45th president, was the port’s busiest month for trade with China in the past 10 years, when cargo valued at $202.2 million moved through the port.
The Port of Vancouver primarily is export-driven, said Alex Strogen, the port’s chief commercial officer.
As much as Trump likes to bemoan the United States’ trade deficit with China, the port ships far more cargo to China than it receives. During the past 10 years, for every $1 in Chinese imports passing through the port, $11.95 in exports were sent to China.
Despite intense volatility and near-daily posturing between the world’s two economic superpowers, the Port of Vancouver set a record for operating revenue during the first six months of 2019.
The port brought in $22.6 million in revenue, an 18.5 percent increase from the first six months of 2018 and an 8.9 percent increase from the previous record, $20.8 million, set in the first half of 2015.
Overall tonnage increased by 429,600 metric tons, compared with the first half of 2018. (A metric ton is 1,000 kilograms, or 2,204.6 pounds.)
“We have been very, very busy,” Scott Goodrich, the port’s director of finance and accounting, told the port’s three elected commissioners earlier this year.
Copper and soybeans
Strogen said two commodity exports, copper concentrate and soybeans, historically have dominated the port’s trade with China, and “everything else is a rounding error.”
“Vancouver handles more bulk copper concentrate than any other port in the United States,” he said. “We are the major conduit.”
Demand for copper is expected to increase. With mounting concerns about climate change, carmakers are shifting their future emphasis to electric vehicles.
Strogen said an internal combustion engine can require 50 pounds of copper to manufacture; an electric engine needs 180 pounds.
Most of the port’s copper is mined in Montana and Nevada and comes to Vancouver via rail, Strogen said. In the past, 100 percent of copper passing through the port would go to China, which has some of the world’s largest copper smelters, he said. With ongoing volatility, copper traders have turned to other markets in Bulgaria, Japan, South Korea, the Philippines and Spain, he said.
Kinder Morgan operates the copper terminal at the Port of Vancouver. Local officials referred a Columbian phone call to its corporate communications office in Houston, which declined to comment on what ongoing volatility means for its Vancouver operations.
Strogen said the port tries to assist Kinder Morgan by making sure the company has the right facilities for short-term storage during unsteady times.
“The longer you hold the copper, there is a carrying cost,” he added. “A port is not a place to store products (long term).”
Other soybean markets
Soybean exports, the other primary commodity to China through the Port of Vancouver, also have fluctuated with the ongoing trade war.
In 2017, 1.3 million metric tons of soybeans were exported through the port, with 96 percent shipped to China. Last year, the port exported 1 million metric tons of soybeans, with only 26 percent going to China.
“Nobody buys more soybeans than China, period,” Strogen said. “There are other markets, but let’s not kid ourselves. China is the 800-pound gorilla.”
In the past, ships loaded with soybeans would make a straight line from the port across the Pacific Ocean to China. Today, soybeans are shipped through the port to markets in Egypt, Spain and the Netherlands.
“Now it’s a web of ships coming out of the port,” Strogen said, referring to ships sailing to destinations around the globe.
Big grain elevator
United Grain Corp., a subsidiary of Japanese conglomerate Mitsui & Co., operates the largest grain elevator on the West Coast. The Vancouver grain terminal was built in 1935 and nearly doubled in capacity in 2011.
“Our company sources, manages, sells and executes all aspects of a grain transaction, from the farm gate to the export gate,” Augusto Bassanini, United Grain’s president and CEO, wrote in an email to The Columbian. “Our business runs 24 hours per day, and we are constantly searching for sales channels.”
Bassanini is among those who would like to see the trade war end, the sooner, the better.
“We support markets free from trade barriers, such as tariffs, and allow the free market to dictate how trade is handled based on competitiveness and efficiency,” Bassanini wrote in his email.
The trade war has dragged on for more than a year, with the U.S. slapping tariffs on Chinese goods and China retaliating in a tit-for-tat battle playing out on the world stage.
“We follow every aspect of the trade dispute, but we remain focused on managing our business,” Bassanini wrote. “What is out of our control, we let someone else worry about it.
“Managing market volatility is something we do on a daily basis, and managing stress is part of our daily routine.”
When will it end?
Bassanini believes the trade war might be nearing its final stage.
“It is my personal opinion that we are nearing a crescendo and that some sort of deal is imminent, based on the most recent rhetoric,” he wrote. “The momentum gained with a tentative agreement in the Japanese-U.S. bilateral trade agreement is a sign that the U.S. is ready to negotiate with other countries.”
Strogen said continued trade volatility reinforces the importance of the port having a diversified portfolio, for trading partners and type of cargo.
“No one knows how long the trade war is going to last,” he said. “As a port, our responsibility is not to be hyper-dependent on any one country or any one commodity.”