Port Storage Facilities Over-Flowing with Steel

For a number of years, going back to the beginning of the recession in late 2008/early 2009, the ports took a hit as the number of vessels shrank and the need for trucking shrank right along with the slowdown in the economy.

Now the infrastructure is struggling to keep pace with the new demand.

“Trucking and space comes at a premium,” said one trading company this afternoon. “If you have patience you do OK, or you have to pay a premium.” He went on to say, “Over the short term we are all scrambling….”

That same trading company told us that a large number of late foreign orders are compounding the problem. Steel which was originally sold back-to-back, in other words, was supposed to ship off the dock directly into the customer’s plant is now having to go into storage.

Fleetwood Port Services told us that railcar availability into Houston is taking much longer than usual, “…in some cases taking 2 to 3 weeks to secure a car for loading, which usually takes 7 to 10 days.”

Fleetwood went on to tell us, “What we are witnessing on the rail side is people are using the cars as portable warehouses, specifically gondola’s and flatcars, loaded with pipe. At current, within our small industrial park there is an excess of 500 loaded rail cars waiting to be unloaded and the number is growing, daily. Truck capacity continues to be tight at both facilities and pricing demand is increasing weekly for their services. Customers that utilize our warehouse domiciled trucks are beginning to fight over them for local distribution.”

Fleetwood reported that long products appear to be “lingering” at the port longer than flat rolled which was “moving at a steady pace early on. Beginning in the second quarter we started seeing material, flatroll, linger a little longer at some of our competitor locations. Even the stevedore companies are beginning to complain about the duration customers are leaving material on the docks, yet it continues to arrive in record amounts compared to the last few years.”

Fleetwood reported that they are receiving information which suggests that their automotive, commercial/industrial manufacturers and the housing sector are increasing orders for future import for delivery into their facilities.

“As you know we are a relatively small company in comparison to some, yet this year in Houston alone we have experienced an increase of 20,000 tons of imported materials through the Port of Houston in support of the housing and commercial construction sectors.”

We asked one of the traders how long this excessive flow of foreign steel will last. He told us, “When we think that its good we believe it is going to be good forever. When it’s bad we think it will be bad forever. In reality neither is true.” He pegged the problem as short term and that the issues would be resolved over the next 90 days.