Up to the challenge: PORTS

Invest to Meet Soaring Demand

By John Paul Quinn -- Logistics Management, 3/1/2001

Ports Supplement North American ports have addressed many challenges over the years. But today they are facing one of their greatest tests ever: managing the soaring container volumes that are pouring through their gates.

Surveys of AAPA’s North American member ports indicate that they plan to spend about $9 billion over the next five years on infrastructure development. Projects designed to accommodate anticipated growth will include building new container facilities and cranes, dredging channels and berths, updating bulk and break-bulk capabilities, and improving rail and road accessibility.

Nagel is quick to point out that bricks, mortar, and new equipment are only a part of the equation: Information technology and other productivity-enhancement tools will be needed to increase the efficiency of existing facilities.

Although such improvements are critical to ports’ future success, there are some rocks in the water. Ports throughout the U.S. and Canada each have their own unique challenges.

North American ports share a number of common concerns. These include balancing import and export trade, constructing new rail and road access corridors, and attaining the water depth and the new generation of cranes needed to accommodate today’s containership behemoths.

“The strain on coastal resources and transportation systems is going to increase...and this is a challenge for all ports,” observes Byron Miller of the South Carolina Ports Authority. “We all have to look at long-term transportation planning. The port is not the beginning or the end. It’s a link in a highly complex logistics chain.”

Aggressive in Seattle
The Port of Seattle has experienced a healthy annual growth rate of 4 percent over the past decade, and that is expected to continue. The majority of the port’s business is container traffic, which is expected to grow next year at a slightly higher rate.

To attract new business, the port has constructed two new 200-acre container terminals. One has already been completed, and the other is half-built.

Seattle’s most significant program is ‘Fast Corridor,’ its joint venture with the Port of Tacoma, the State of Washington, the U.S. Department of Transportation, and both railroads. This $360-million project involves a complex of over- and underpasses that will separate rail traffic from highway and road traffic, Steve Sewell, managing director of the Seaport Division of the Port of Seattle, explains. “[T]hat will allow us to move cargo through the region without congestion and obviate commercial and public vehicular tie-ups.”

Portland Focuses on Imports
Down the coast in Portland, Ore., the driving objective is to balance the traffic flow.

The port has embarked on a series of initiatives, the largest being an ongoing 10-year effort to deepen the 100-mile shipping channel of the Columbia River out to the Pacific. The $196-million endeavor, which includes other ports along the river, will deepen the existing 40-foot channel to 43 feet to accommodate larger container and bulk vessels.

In addition, the port will spend $15.5 million on its North Marine Drive Extension Project to improve the roadway leading to its major container terminal. Portland’s complement of seven cranes is being upgraded at a cost of $17.2 million: Three of the port’s Panamax cranes are being raised to handle larger ships, and another post-Panamax crane is being added to the two already in place.

The Port of Portland offers significant benefits to importers, says Aaron Ellis, maritime public affairs manager. “We’re offering a delay-in-transit program so that importers can store containers at our Terminal 6 free of charge. So they don’t have to pay to devan cargo, warehouse it, truck it, and reload it,” he explains.

‘The Southern California Beast’
When it comes to growth rates, the Port of Los Angeles has often been at the head of the pack. “We expect to go into double-digit growth again this year, maybe in the range of 15 to 17 percent, provided the economy stays somewhat together,” observes Al Fierstine, director of business development at the Port of Los Angeles.

Just a few miles away, the Port of Long Beach is keeping up the pace. Arthur Wong, media relations director, says the port expects to average about 6- to 7-percent growth annually over the next decade. That’s a significant number when you consider the kind of volume Long Beach handles: some 4.6 million twenty-foot equivalent units (TEUs) last year alone, says Wong. “Los Angeles grabbed some of our market share, but together our two ports are the third-largest port complex in the world after Hong Kong and Singapore,” he notes. Their prominent position in global trade and explosive growth are why Los Angeles and Long Beach are sometimes referred to in the maritime industry as “The Southern California Beast.”

The two ports cooperate in more than just name. Both are involved in a massive joint-venture project called the Alameda Corridor, a 20-mile surface and subsurface rail link into Los Angeles that will be used by unit trains leaving the harbor terminals. The project will consolidate the two ports’ rail lines and connect them directly with the main intermodal terminals of the Union Pacific and Burlington Northern Santa Fe for the city. The $2.4 billion project will be completed next year.

Both ports are taking other steps to accommodate soaring trade volumes. Los Angeles is building a 400-acre mega-terminal for Maersk Sealand, which is reputed to be the largest proprietary terminal in the world. In Long Beach, a 375-acre terminal is being constructed for Korean carrier Hanjin Shipping.

Happenings on the Hudson
The Port Authority of New York and New Jersey estimates that over the next 40 years, the port will realize growth of 3.5 to 4 percent per annum, which would mean a doubling of cargo volume by 2010 and a quadrupling through the later years of that period.

“We think these forecasts are, if anything, conservative,” says spokesman Dan Maynard. “In the first nine months of 2000, container volumes alone increased about 9 percent. So we need to begin investing now to provide the marine terminal capacity as well as other aspects of the transportation system within our harbor needed to accommodate this growth.”

New York/New Jersey has launched a reinvestment program that offers the port’s leasing partners incentives to modernize and improve the productivity of existing terminals. The port authority’s goal is to double productivity levels from 1,500 containers per acre per year to about 3,000.

On the land side, the port is working with the New York and New Jersey Departments of Transportation to expedite the movement of containers from the terminal areas. This will involve improving highway and secondary road access. A related project in New Jersey, called “Portway,” will improve truck access to rail terminals in the port area.

No Congestion in Charleston
The Port of Charleston, S.C., is projecting about 7-percent growth over the next year, down from the double-digit growth of the last two years but still quite respectable. In fact, in less than 10 years, the port has doubled its business. “Charleston is mainly a container port, and this year we’ll move about 1.6 million TEUs,” reports Byron Miller, public relations manager for the South Carolina Ports Authority.

Miller says that most of the port’s current plans focus on capacity enhancement rather than new construction, including new information systems, high-tech equipment, and extended operating hours. There also is a $243-million allocation in place for terminal improvement and new equipment.

A four-year project, now in progress, will deepen the inner harbor to 45 feet mean low water and the entrance channel to 47 feet. Port executives expect that enhancements to existing infrastructure will be sufficient until 2006 or 2008, after which time new facilities will be needed to handle continued growth.

Traditionally an export-heavy port, with traffic destined for about 150 countries, Charleston is now courting the import trade. One way it is attracting new business is by offering value-added services right on port property. Miller cites a recently acquired account, Guinness North America, which distributes seven different lines of beer from Charleston.

Sea Change in Savannah
At the Port of Savannah in neighboring Georgia, business is going great guns. “We’re in the middle of a pretty vibrant growth curve,” observes Byron Hock, director of trade development for the Georgia Ports Authority. “For the first five months of this fiscal year, Savannah is showing growth of just under 30 percent.”

The port’s accelerated growth over the past half year has made it imperative to stay ahead of the curve. To do that, Savannah has moved from a wheeled or grounded operation to a stacked operation, storing containers four high in container terminals rather than on chassis, which maximizes usage of the available acreage.

Savannah’s existing terminal area is about 1,000 acres with 7,700 feet of container berths. Construction starts this year on an expansion program involving an additional 87 acres. It will result in some 9,400 contiguous feet of container berths, reportedly the largest stretch of berths in the country.

The port authority also sees intermodal capabilities as key to handling rapid growth. As a result, Savannah will open an intermodal container-transfer facility that it built on newly acquired property this spring.

Canada Keeps Containers Coming
Canadian ports on both the East and West Coasts are coming off a year that saw above-average and even record levels of growth.

“In 2000, we set a record in the number of containers handled for the eighth consecutive year, surpassing the 1 million-TEU mark,” says Dominic Taddeo, president of the Montreal Port Authority.

He expects that this year will be more competitive due to a slowing economy, signs that the major shipping lines are intent on controlling costs, and a tendency in the market to drive down prices. But Taddeo is optimistic nonetheless: “We’re still looking for a continuing increase in about the 3-percent range. Despite any slowdown, we believe we’ll see an increase in containers because of our gateway position and infrastructure and the intermodal and logistics systems we have in place.”

More business is clearly there to be had: One of the port’s major shipping lines, the powerful Danish consortium Maersk Sealand, has increased the size of its ships that call at Montreal from 1,200 TEUs to nearly 2,000 TEUs in some cases.

Montreal is not resting on its laurels, though. An ambitious CDN $200-million infrastructure-enhancement program will commence in the spring. Objectives include expansion of container terminals and upgrading of rail links by adding spur lines. This will allow both the Canadian Pacific and Canadian railroads to pick up unit trains at the docks for routing westward to Toronto, Detroit, and Chicago. Another important development now underway is a CDN $25-million project to build a state-of-the-art terminal for handling non-containerized general cargo.

On the Atlantic Coast, Halifax posted a 20-percent increase in container traffic last year, bringing it over the half-million TEU mark for the first time.

Despite that big leap in volume, capacity is not a problem. “We have significant capacity in both of our existing container terminals,” reports Patricia McDermott, vice president of marketing for the Halifax Port Authority. She notes that equipment capability has been improved with the addition of two new post-Panamax cranes.

Strong growth is expected to continue this year, although probably at a slightly slower rate. McDermott notes that the port has seen a 35-percent increase in its business with the U.S. Midwest, due largely to efforts by Canadian National subsequent to its acquisition of the Illinois Central Railroad. The construction of a rail tunnel from Sarnia, Ontario to Port Huron, Mich., cut transit times to that region and has drawn new business to Halifax as a result.

On the West Coast, Vancouver enjoyed a record 74-million-ton year in 2000, and is expecting a moderate increase in overall volume this year.
“We are seeing our West Coast market share growing, and we are planning to develop another million TEUs of new infrastructure over five years,” says Kevin Little, vice president of business development at the Vancouver Port Authority.

That program calls for adding 60 acres to one terminal, construction of additional facilities, and improvement to both rail and road access to the port.

“We’re looking at fluctuations in some sectors,” Little observes. “We’ve seen shifts from break-bulk to containers and back in some types of cargo, but as long as it stays in the port we’re happy. Volumes overall are good, but I don’t think we’ll exceed our record growth of last year.”