Port congestion unlikely to hamper shipments this fall

By Jeff Berman -- Logistics Management, 7/1/2006

WASHINGTON—U.S. retailers are unlikely to have much trouble with congestion at major container ports this fall, according to the most recent "Port Tracker" report issued by the National Retail Federation, a national retail trade association, and Global Insight, a provider of economic and financial information. When the report was issued last month, operations were running smoothly and congestion was not an issue, the report's authors said.

Port Tracker research surveys the ports of Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston, and Savannah. These ports handled a cumulative 1.34 million 20-foot equivalent units (TEUs) of container traffic in May, which was the most recent data available. That was up 1.2 percent from April and 9 percent from May 2005.

Even with container volumes continuing to increase, shippers needn't worry, said Global Insight economist Paul Bingham. "The overall outlook for this year's peak season is still positive, with no major congestion expected at any of the covered ports, so shippers can keep to their original importing plans for this year—for now," he said.

Another reason for the favorable forecast is that various members of the international trade community are taking steps to prevent conditions, such as labor strikes and surges in cargo volumes, that could cause extended delays or allow congestion to get out of hand, Bingham said.

Despite that positive outlook, the situation among port drayage truckers remains a concern. For one thing, peak-season container volumes are expected to again exceed the record levels handled last year. "This means the bar has been raised again, and just repeating the performance of last year is not going to be sufficient," Bingham said. That will put more pressure on drayage drivers, who pick up and deliver full and empty containers.

Indeed, the mood of drivers at many ports has deteriorated in comparison with last year, said Bingham. Chief among their worries, he believes, are high fuel prices and the pending introduction of ultra- low-sulfur diesel fuel in October, the potential effects of the current immigration debate on their segment of the trucking industry, and the introduction of the Transportation Worker Identification Credential (TWIC) program, which requires security screening for all port workers.

"How that translates into future operational impacts is very difficult to quantify, but there is no question that the risk of disruptions from port truckers is higher that at the same time last year," Bingham said.

Also meriting shippers' attention is continued tight capacity in intermodal rail networks throughout North America. Railroads are running without the slack capacity that could help them manage service disruptions if any should develop.

Going forward, Bingham said, U.S. container trade will continue to grow after this year, but any growth will occur at a slower rate than was seen in 2005. That will help to maintain the smooth flow of containers at the biggest U.S. ports, but it doesn't mean that shippers and carriers can relax entirely.

Instead, they should continue to plan for future growth. What's more, Bingham warned, if infrastructure capacity and productivity do not keep pace with growth, costs for shippers and their customers will increase, and that will make imports more expensive and U.S. exports less competitive.