Top U.S. Seaports: Slower trade means time to rebuild
When it comes to telling a good news/bad news story about ocean vessel trade this year, most of it is bad. Having acknowledged this, however, leading domestic port authorities are now emphasizing their plans for enhanced infrastructure and repositioning for the economic rebound.
Patrick Burnson, Executive Editor -- Logistics Management, 2/1/2009
Executive directors at our nation’s leading seaports rarely agree on a single issue, but this year may be the exception.
A global recession has had a profound impact on containerized traffic moving in both directions, and that fact has been broadcast in every annual report issued by these ocean gateways in 2009. Furthermore, spokesmen for the American Association of Port Authorities (AAPA) contend that it may be years before the numbers are back to those posted earlier in the decade when the trade juggernaut was perceived as an unstoppable force.
Fiscal accountability will be a major priority for all ports, especially in light of past indiscretions committed by a few players in recent years regarding outside contracting. Enhanced multimodal connections and surface networks will also be needed for leading ports to remain on top. Finally, the top ports will have to adjust to new trends being shaped by the oncoming changes in the Panama Canal and shifting vessel deployment cycles.
The dynamic trio: Los Angeles, Long Beach, & New York/New Jersey
At the Port of Los Angeles, most of the media attention has been placed on how it is working with the community to “green” its cargo operations. And it’s been a good story, too. But at the same time, authorities here are maintaining that there’s a significant tale for shippers that may have been only related through the trade press.
Late last winter, for example, the port awarded an estimated $383.7 million in construction contracts, fueling a surge of construction activity that will create thousands of jobs in the region. “The rise in construction activity underscores our mission to continue upgrading port infrastructure and cargo terminals in the most environmentally sustainable fashion,” says port executive director Geraldine Knatz, Ph.D. “After a seven-year hiatus in our capital development program, this construction activity is a sign that we are back in business in a big way.”
At neighboring Port of Long Beach—the nation’s second leading ocean cargo gateway—the emphasis on infrastructure includes keeping its financial house in order. Port spokesmen are justifiably proud that Long Beach recently received a Certificate of Achievement for Excellence in financial reporting for its 2007 Comprehensive Annual Financial Report from the Government Finance Officers Association (GFOA).
“The port has a strong commitment to transparency, and one of the ways we demonstrate this is through our comprehensive financial reporting,” said Richard D. Steinke, the port’s executive director.
This is hardly a landmark event, however. Indeed, Long Beach has earned the certificate for 25 years in a row from the GFOA, an association of more than 17,000 state/provincial and local finance officers in the United States and Canada. The GFOA established the certificate program to recognize governmental agencies that produce a high quality and thorough financial report.
Finances are top-of-mind with the third largest port, too, but that’s not going to stop it from expanding. The Port Authority of New York and New Jersey is going to remain committed to its capital spending plans despite the slowdown in world trade, says Richard Larrabee, director of port commerce.
“No matter how long or how deep the recession is, the next couple of years are going to be tough for us,” he says. “But from our perspective, we truly believe the forces in play are going to bring cargo back here; perhaps not what we saw in the 'go-go years’ of the last decade, but at a moderate pace.”
Larrabee takes the long view about competitive forces shaping the NY/NJ strategy.
“When you look around the country at places like the West Coast you realize we are in fairly decent shape,” he says, observing that while total cargo volumes here are off about 0.3 percent this year compared to 2007, loaded container volumes are actually 5 percent higher than last year.
Moving forward, The Port Authority Board of Commissioners has approved a $6.7 billion 2009 budget that provides for a robust $3.3 billion in investment in capital projects.
Ports on the rise: Savannah, Oakland, & Hampton Roads
Now let’s move on to a few aspirants that have a real chance of capturing more market share when the nation comes out of the current economic doldrums.
The AAPA lists Savannah as the leading contender to advance in “the top ten” by 2010, and that should be no surprise given the fact that it is relying on more traffic through the Panama Canal in future years. Currently, though, the gateway is keeping pace under current market conditions.
Why? Just take a look at Garden City Terminal, a secured, dedicated container terminal owned and operated by the Georgia Ports Authority (GPA). It’s supported by the port industry’s only “client relations center,” designed to respond to customer needs through a single point of contact. Services offered here range from pick-up/delivery verification to problem resolution. Customers also obtain guidance regarding government inspections and electronic data interchange (EDI). The closer though, is that it represents the largest single-terminal operation in North America.
“The facility’s single-terminal design allows the port to operate in an environment of maximum efficiency and flexibility, as well as increased security, due to the concentration of all manpower, technology, and equipment in one massive container operation,” say port spokesmen.
Add to this a pro-business, pro-port state versed in the unique requirements of international trade and investment, as well as an experienced labor force from one of the top-six fastest growing populations in the nation, and the opportunities offered by Garden City Terminal are remarkable among U.S. ports.
Two Class I rail providers serve the Garden City Terminal location, which also offers immediate interstate access to the more than 100 trucking companies that service the Savannah area. And with land available for future development, the facility has strategic plans in place for its expansion. Industry analysts say that this project, together with numerous others identified under the GPA’s long-term strategic development plan, will increase throughput capacity from the current 2.62 million TEUs (twenty-foot equivalent units) to 6 million TEUs in 2018.
The Port of Oakland, meanwhile, is facing some unique challenges due to the ongoing global financial crisis. As the leading outbound West Coast load center, the slack demand for U.S. exports is having an impact. China, which is Oakland’s largest export market, is a special concern for shippers.
“As the third largest export market and a major source of foreign direct investment, China’s slowdown has certainly added to the U.S. economy’s woes,” says Saji Daniel, president and CEO of Tradex International, one of the largest suppliers of vinyl, latex, polyethylene, and nitrite disposable gloves in the U.S.
According to Daniel, China also seems poised for a measured recovery, thanks in large part to an industrial sector comprising low-tech manufacturers with minimal capital requirements. And that’s good news for Oakland, which has been continuing to deepen its harbor in an effort to attract more direct, fully-loaded “mega-vessel” calls, and hopes to be ready for a rebound in outbound loads as well.
The Port of Hampton Roads, on the other side of nation, has no such concerns. Plenty of deep water and an evolving rail network are making it the port to watch as ocean gateways realign for the next generation of container vessels.
It has now become the premier mid-Atlantic load center, and has the deepest channel on the East Coast, with both inbound and outbound lanes dredged to fifty feet. Container throughput here is not the only part of the story, however, as it is a world leader in coal export shipments. Also noteworthy, is the fact that more than 50 million tons of bulk cargo, including grains and petroleum, is shipped through Hampton Roads annually.
Genuine movers and shakers: Seattle, Tacoma, Houston & Charleston
The Port Commissions for Seattle and Tacoma met late last year to discuss ways the two ports can cooperate to better serve the region’s economy. Joint regional promotion and the need to invest in transportation infrastructure topped the agenda, as the two ports identified projects crucial to expanding trade throughout Washington State.
“More than ever, we need to focus our efforts on creating jobs and building the transportation infrastructure that keeps Washington at the forefront of global trade,” says Seattle Commission president John Creighton.
The two commissions plan another joint meeting this month. Commission and staff work groups on joint promotion, transportation infrastructure, environmental efforts, and port security will continue to meet regularly in the interim.
Developing a shared hemispheric strategy is moving the Port of Houston Authority (PHA) closer to its neighbor in Panama. “The PHA is becoming the leading alternative to traditional West Coast cargo landings, which has resulted in above-average growth rates,” says Adsinar Cajar Bocek, consul general of Panama. “Together, we have acted as ambassadors to the trade community. The expansion of the Panama Canal will provide an entryway to the Gulf Coast from Asia and is a tool for the port and the region to grow.”
With the Panama Canal representing a strategic link between the Port of Houston Authority and East Asia—the fastest-growing PHA containerized cargo market—the PHA recently relocated its regional office for trade growth within Central and South America, excluding Brazil, to Panama City, Panama, under the leadership of Arturo Gamez. The PHA has also renewed and extended its Memorandum of Understanding for three years with the Panama Canal Authority.
And finally, some news that should be greeted by shippers with open arms this year. The South Carolina State Ports Authority (SCSPA) is instituting an across-the-board rate discount in the Port of Charleston to provide near-term relief to customers hit by the current global economic situation.
Through March 31, the SCSPA’s “Mid-Winter Rate Roll-Back” will reduce contract unit fees for container carrier customers by five percent. “Our carrier customers are facing some very challenging market conditions,” said Bernard Groseclose Jr., president and CEO of the SCSPA. “We heard from them and we’re responding. This sends a clear signal that we are serious about their business today and in the future.”
The SCSPA’s action is aimed at maintaining the viability of current service levels from its carrier clients, avoiding cuts that would negatively affect the local maritime industry and jobs statewide. Additionally, this rate reduction could be attractive to those customers who may wish to concentrate business in Charleston. Could this be a trend adopted by the top ports in the U.S. for the rest of the year? LM will be tracking it closely in 2009.
| 2007 Rank | Port (State/Province) | Country | 2007 TEUs | 2006 TEUs | Absolute Change | Percent Change | 2006 Rank |
| Sources: AAPA survey; Secretaría de Comunicaciones y Transporte, Coordinación General de Puertos y Marina Mercante, various websites. | |||||||
| 1 | Los Angeles (CA) | United States | 8,355,039 | 8,469,980 | -114,941 | -1.4% | 1 |
| 2 | Long Beach (CA) | United States | 7,316,465 | 7,289,365 | 27,100 | 0.4% | 2 |
| 3 | New York/New Jersey | United States | 5,299,105 | 5,092,806 | 206,299 | 4.1% | 3 |
| 4 | Savannah (GA) | United States | 2,604,312 | 2,160,168 | 444,144 | 20.6% | 6 |
| 5 | Oakland (CA) | United States | 2,388,182 | 2,391,598 | -3,416 | -0.1% | 4 |
| 6 | Vancouver (BC) | Canada | 2,307,289 | 2,207,748 | 99,541 | 4.5% | 5 |
| 7 | Hampton Roads (VA) | United States | 2,128,366 | 2,046,285 | 82,081 | 4.0% | 8 |
| 8 | Seattle (WA) | United States | 1,973,504 | 1,987,360 | -13,856 | -0.7% | 9 |
| 9 | Tacoma (WA) | United States | 1,924,934 | 2,067,186 | -142,252 | -6.9% | 7 |
| 10 | Houston (TX) | United States | 1,768,627 | 1,606,786 | 161,841 | 10.1% | 12 |
| 11 | Charleston (SC) | United States | 1,754,376 | 1,968,474 | -214,098 | -10.9% | 10 |
| 12 | San Juan (PR) (fy) | United States | 1,695,134 | 1,729,294 | -34,160 | -2.0% | 11 |
| 13 | Manzanillo (COL) | Mexico | 1,411,146 | 1,249,630 | 161,516 | 12.9% | 14 |
| 14 | Montreal (QU) | Canada | 1,363,021 | 1,288,910 | 74,111 | 5.7% | 13 |
| 15 | Honolulu (HI) (fy) | United States | 1,125,382 | 1,113,789 | 11,593 | 1.0% | 15 |
| 16 | Port Everglades (FL) (fy) | United States | 948,687 | 864,030 | 84,657 | 9.8% | 17 |
| 17 | Miami (FL) (fy) | United States | 884,945 | 976,514 | -91,569 | -9.4% | 16 |
| 18 | Veracruz (VER) | Mexico | 729,717 | 674,872 | 54,845 | 8.1% | 19 |
| 19 | Jacksonville (FL) (fy) | United States | 710,073 | 768,239 | -58,166 | -7.6% | 18 |
| 20 | Baltimore (MD) (1) | United States | 610,466 | 627,947 | -17,481 | -2.8% | 20 |
U.S. Seaport Update: Location Matters
08/31/2008Panama Canal Perspective on Shipping
08/24/2009Tight Squeeze (page 2)
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