I hate to say I told you so, but… I told you so. Back in February, I took note of major shifts in global trading patterns resulting from the declining value of the U.S. dollar. In “The Inscrutable Meaning of the Shrinking Trade Deficit,” I noted that a weaker dollar would translate into greater U.S. exports and lower imports. That’s Economics 101 — not exactly a leap of genius. But I went a step further, writing:
[Virginia] lawmakers are being urged to make massive infrastructure investments based on those global trading patterns. Hampton Roads is undergoing a massive expansion of port capacity predicated on the view that the volume of imported containers, mostly from China, will continue basically forever.
Rising imports implies the need for more trucks — and highway capacity. But a leveling off of imports suggests that the anticipated surge in truck traffic may not materialize. What worries me is that the business-political establishment of Hampton Roads will plunge ahead blindly with its monumental road improvement projects, saddling the region with a massive extra tax burden in order to handle an increase in imports that never materializes.
Now comes this news from the Daily Press:
For the first time since before 2003, annual revenue for the authority’s terminals is projected to fall by nearly 7 percent in 2009, a decline officials attributed to a continuing economic downturn and the specter of losing two major customers to Portsmouth competitor APM Terminals Inc.” …
“If you look at the trend in the last few months, I think our volumes have been down three of the four months,” said Joseph A. Dorto, president and chief executive of VIT. “We look out there, read the newspaper and see what the economy looks like, and we think the rising cost of fuel, energy and food are going to cause people to cut back and not spend as much and buy as much.”
In other words, the shift in global trading patterns is now being felt in Hampton Roads. What’s not clear from the Daily Press story is how much of the anticipated 7 percent decline in container traffic represents a loss of state port business to private terminals in Portsmouth, and how much will manifest itself in a smaller number of trucks running up and down Interstate 64 and U.S. 460. Clearly, though, truck traffic, whether it originates from Norfolk or Portsmouth, is expected to decline.
Combine the port trend with yesterday’s post, “Vehicle Miles Traveled – Down 4.3 Percent.” Folks, we are experiencing a significant shift in the demand curve for transportation capacity. That’s a fancy way of saying that we won’t need as much new transportation infrastructure as we thought we did. Whether any of this will penetrate the consciousness of lawmakers before they convene this June to address transportation funding, however, remains to be seen.
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