Special Report: Top 10 North American ports roll with the changes

While container throughput is still the major metric used to measure a seaport's strength, shippers understand that leading load centers are completely reliant on vessel deployment schedules. Familiar patterns will be altered in the coming year, and this shift in trade may mean new gateways will rise to the top.

By Patrick Burnson -- Logistics Management, 3/1/2008

1. Port of Los Angeles, CA
2. Port of Long Beach, CA
3. Port of New York/New Jersey
4. Oakland, CA
5. Vancouver, BC
6. Savannah, GA
7. Tacoma, WA
8. Hampton Roads, VA
9. Seattle, WA
10. Charleston, SC

The container throughput numbers are in for 2007, and a more balanced trade picture has emerged. Volumes are down at many gateways, but outbound moves are ramping up. Figures provided by the American Association of Port Authorities (AAPA) indicate that major load centers are keeping hold of their market dominance, however, spokesmen say there’s more to this story than meets the eye.

“Sheer size of a port in terms of traffic flow says nothing about productivity, efficiency, or responsiveness to customers,” says AAPA spokesman, Aaron Ellis. Moreover, Ellis adds, ports can be compared in many different ways—by volume or value of trade, number of revenues, and storage capacity, as examples. Be that as it may, here are the current standings, with seaport authorities giving us what they regard as key differentiating factors.

Port of Los Angeles/Port of Long Beach Feel Export Boom

Macro-economic forces had a major impact on the Port of Los Angeles, although it did manage to retain its number one position for the eighth straight year.

“With soft consumer spending and the weak U.S. dollar, our 2007 results were on par for the most part with West Coast and national volumes,” says Port of Los Angeles Executive Director Geraldine Knatz, Ph.D. This is a reminder, says Knatz, that ports are a reflection of the economic climate. “One example is the housing slump, which correlates into a decline in consumer demand for furniture—which is our largest containerized cargo import.”

The Port of Los Angeles handled 8.4 million TEU (twenty-foot equivalent units), a 1.36 percent dip in total TEU volume but a 3.2 percent increase in loaded TEU volume over the 2006 calendar year. Containerized export cargo continued to grow at a record pace in 2007, with a 13 percent increase of loaded outbound containers (184,023 TEU) and an 11.4 percent decrease in empty containers, or 300,821 fewer containers.

Since 2000, containerized exports have risen 63 percent. The port’s top export trade includes cotton, waste paper, scrap metal, animal feed, resins, and aircraft and automotive parts. “On the heels of a 13 percent volume gain in 2006, our volumes started off strong last January and February, but declined from there, and we are not anticipating overall gains in 2008 due to the weak economy and the shipping industry’s focus on increasing Asia-Europe capacity,” says Knatz.

For the neighboring Port of Long Beach, similar forces diminished its second-place finish. “The drop in import growth can be attributed to the slowdown in the U.S. economy,” said the port’s Executive Director Richard Steinke. Still, the port accounted for more than $100 billion in trade last year.

With strong demand in Asia for U.S.-produced raw materials, the latter half of the year saw a dramatic increase in exports. Between June and November 2007, Long Beach saw six consecutive months of export increases of more than 30 percent, fueling the overall yearly jump of 22 percent. Because more containers heading overseas were filled with exports, the number of empty containers moving across port terminals declined by 22 percent.

This came as a pleasant surprise to port authorities. “We didn’t expect to see such a dramatic boom in exports,” admits Steinke, “which was a big silver lining in a year that was otherwise difficult for many American retailers.”

Port of New York/New Jersey Hit New Records

Trade analysts note that most major ocean carriers had a break-even or losing year in 2007, mostly due to big bumps in bunker fuel costs. And even though these fuel costs are now being passed on to the shipper, carriers are investing in the Asia-EU market where they may get a better return on discharged cargo.

This means good things for the Port of New York/New Jersey, which remains solidly in third place. While all the numbers are not yet in, the Port predicts that total volume will be up 7.6 percent over last year. “Our figures compiled from January to October indicate that we will match our forecast,” said Steven Coleman, a port spokesman.

Led by continued growth in trade with the Far East, Northern Europe, and Southeast Asia, containerized cargo volumes for New York/New Jersey rose nearly 8 percent in 2006—a new record high. The dollar value of all cargo moving through the port exceeded $149 billion for the first time, up 13 percent, and the number of loaded and empty TEU handled in the port exceeded 5 million, a new record as well.

According to Port Commerce Director Richard M. Larrabee, new capital outlays are being made to keep up with the volume. “In the next 10 years, nearly $2 billion in infrastructure upgrades are planned for marine terminal facilities and for off-port roads and railways to improve the flow of cargo,” says Larrabee. In addition to investments in the 50-foot harbor deepening project and the ExpressRail on-dock rail facilities, Larrabee adds that “the budget includes funds to upgrade North Avenue in Elizabeth and to improve the capacity of Port and Corbin streets, two major thoroughfares at the port.” Investments also are planned to develop an Intelligent Transportation System for the port and to improve inland access.”

Oakland Wants Its Share

The Port of Oakland, meanwhile, is concentrating on investing in personnel as well as infrastructure. It also wants to bring in more imports by taking share from its West Coast rivals with more efficient terminal handling facilities.

Last year’s appointment of James Kwon as its new director of maritime was a move in the right direction, say analysts. Prior to coming to the port, Kwon was president and CEO of Total Terminals International (TTI), where he was primarily responsible for building a terminal-operating company which now has container terminals at three major West coast ports: Oakland, Long Beach and Seattle. During his tenure, he helped TTI grow its revenue by as much as 250 percent, and its total container volumes by 30 percent. Oakland, which has always been the strongest outbound port on the Pacific Rim, is hoping that Kwon’s special relationships with major carriers will also be a plus.

“His extensive international trade experience will be of great benefit to Oakland,” says port board president Anthony Batarse.

Indeed, Kwon’s resume is impressive in this regard. His private sector past includes stints as sales manager for Hanjin Shipping Company; marketing director for Palmco Corp.; and district sales manager for United States Shipping Lines.

Canada’s Powerful Partnership

While many stateside ports talk about regional cooperation, three key Canadian gateways actually did something about it. Effective this year, British Columbia’s lower mainland ports became fully amalgamated, combining the land and resources of the Fraser River Port Authority, the North Fraser Port Authority, and the Vancouver Port Authority.

Given the size and scale of the newly-formed Vancouver Fraser Port Authority (VFPA), it will be well positioned to better coordinate port planning and develop new investment opportunities that will facilitate the circulation of goods to and from foreign markets. The VFPA will also have greater resources for land acquisition, river management and strategic infrastructure investments.

The amalgamation was a key policy measure under the Government of Canada’s “Asia-Pacific Gateway and Corridor Initiative.” The provincial government has also voiced its support for the deal.

Gordon Houston, who served as chairman of the Lower Mainland Port Amalgamation Steering Committee, says the alliance will provide “a broader scope and more influence,” for the Vancouver Fraser Port Authority.” Needless to say, the U.S. West Coast ports will be certainly tracking these developments closely.

Georgia is Bullish

Exponential growth on the U.S. East Coast, meanwhile, has given the Port of Savannah reason to cheer. While the AAPA currently ranks it sixth, officials here talk a different story. “As the fourth largest container port in the nation and the sixth largest auto port in the nation, we posted another record-breaking year for Georgia’s ports,” said Steve Green, chairman of Georgia Port Authority’s (GPA) board of directors.

The Port of Savannah posted a 20.6 percent increase in containers handled, notes Doug J. Marchand, GPA’s executive director. “Investments the state of Georgia and the Authority have made in our facilities are paying huge dividends,” he says, adding that Savannah is moving forward with an aggressive $1.2 billion capital improvement plan.

The first project is a $10.9 million contract to complete the Chatham Yard Intermodal Container Transfer Facility. According to Marchand, this project will greatly enhance Savannah’s rail capacity, improve overall terminal efficiencies, and increase Georgia’s reach throughout the southeastern U.S. The second project is a $4.6 million contract to complete 42 additional acres of container storage for the new Container Berths 8 and 9.

“With the additional capacity created by these and other planned projects bolstered by our continuing efforts to deepen the Savannah Harbor up to 48 feet, Savannah will continue to stimulate growth,” adds Marchand.

Tacoma Holds Steady

Word coming out of the Port of Tacoma, by way of contrast, was far less bullish. While holding down the continent’s seventh spot, officials here were admitting that 2007 hardly lived up to expectations.

After several years of record cargo performance, Tacoma’s cargo volumes flattened due, in part, to a softening U.S. economy, a weakening national housing market, and the rising cost of inland transportation. Still, the port’s container volume totaled 1.9 million TEU last year.

But the port’s executive director, Timothy Farrell, expects a recovery in 2009, when Tacoma containerized cargo volumes are predicted to rise to new record levels. “Over the long-term, world trade is expected to triple by 2030,” he says. To accommodate that forecast, Farrell says that Tacoma’s five-year, $953.6 million capital improvement program focuses on expanding terminal, rail, and road capacity.

Virginia Forecasts Even More Growth

Hampton Road’s officials at the Port of Virginia (VPA) were also acknowledging a macro-economic downturn, but are happy to report that they were able to better last year’s performance by 4 percent.

According to Jerry Bridges, the VPA’s executive director, the gateway posted its sixth consecutive year of growth having handled 2.128 million TEUs in 2007, eclipsing last year’s mark by 82,000 TEUs.

Thomas Capozzi, VPA’s senior marketing director, has forecast 2.5 percent growth in container volume for 2008. “We feel the softening economy, combined with the difficulty of producing growth in the rail sector following a 20 percent performance in 2007, will cause our rate of growth to taper off a bit.”

Charleston Sees Gold in Breakbulk

While container volume at the Port of Charleston fell 11 percent in 2007, breakbulk volume rose 18 percent for the year. Meanwhile, new terminal construction advanced and more than 20 million square feet of new warehouse and industrial space is in the works.

In 2007, the Port of Charleston’s total pier volume was 1.75 TEU, down from 1.97 million TEU in 2006. Here, too, spokesmen say a number of factors drove the decline in the container sector: weakness in the EU trade, declining shipments of housing-related commodities and consolidations in the ocean carrier industry.

On the bright side, however, breakbulk business—including rolling stock—increased 18 percent to 649,000 tons, primarily on the strength of export shipments. “Developments currently in progress should help Charleston’s container volume rebound,” say port spokesmen. “Just inland from the port, a number of major developers have disclosed sites that will bring about 20 million square feet in new warehousing and distribution space to the region.”

2006 Rank	Port (State/Province)	Country	2006	2005	Absolute Change	Percent Change	2005 Rank
Reported figures represent total loaded and empty containers and include those moving in domestic and foreign trade fy=fiscal year Source: American Association of Port Authorities
1	Los Angeles (CA)	United States	8,469,980	7,484,624	985,356	3.20%	1
2	Long Beach (CA)	United States	7,289,365	6,709,818	579,547	8.60%	2
3	New York/New Jersey	United States	5,092,806	4,792,922	299,884	6.30%	3
4	Oakland (CA)	United States	2,391,598	2,272,525	119,073	5.20%	4
5	Vancouver (BC)	Canada	2,207,730	1,767,379	440,351	24.90%	10
6	Savannah (GA)	United States	2,160,113	1,901,520	258,593	13.60%	9
7	Tacoma (WA)	United States	2,067,186	2,066,447	739	0.00%	6
8	Hampton Roads (VA)	United States	2,046,285	1,981,955	64,330	3.20%	8
9	Seattle (WA)	United States	1,987,360	2,087,929	-100,569	-4.80%	5
10	Charleston (SC)	United States	1,968,474	1,986,586	-18,112	-0.90%	7
11	San Juan (PR) (fy)	United States	1,729,294	1,727,389	1,905	0.10%	11
12	Houston (TX)	United States	1,606,360	1,594,366	11,994	0.80%	12
13	Montreal (QU)	Canada	1,288,910	1,254,560	34,350	2.70%	13
14	Manzanillo (COL)	Mexico	1,252,215	872,569	379,646	43.50%	16
15	Honolulu (HI) (fy)	United States	1,113,789	1,077,468	36,321	3.40%	14