Top 30 U.S. Ports: Finding the right balance

The recent surge of U.S. exports has created a more balanced trade picture for U.S. ports and the stakeholders they serve. If this is a sustainable trend, analysts expect to see more investment in infrastructure and increased competition among the leading gateways.

By Patrick Burnson · May 1, 2012

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For most multinational shippers, the days of having one or two major domestic ocean cargo load centers is over. Highly segmented supply chains along with cross-enterprise operations are now changing the U.S. landscape. While Mega-vessels may be calling on some deep-water ports, ocean carriers are also hedging their bets by sending smaller ships on alternative deployments.

Zepol Corporation, a leading trade intelligence service, notes that as America’s seaports prepare for balanced trade, shippers can expect to see more regional cooperation among ports. But Zepol’s president, Paul Rasmussen, has one caveat: “That doesn’t mean regional rivalry will disappear.”

Indeed, Ports on the U.S. West Coast—which are supposed to be at risk when the Panama Canal expands in two years—don’t appear to be too concerned. The neighboring gateways of Los Angeles and Long Beach are booming, with a greater balance of inbound and outbound cargo serving to keep them both on top of Zepol’s’ current port rankings.

According to Peter Friedmann, executive director of the Agriculture Transportation Coalition, the dynamics of ocean cargo have “flipped” dramatically. With U.S. exports growing by 5 percent to 6 percent annually, it’s only matter of time when carriers will reconfigure shipping schedules. “It’s pure mathematics,” says Friedmann. “Outbound sailings are catching up with inbound calls, and ports need to make those adjustments.”

West Coast advantage
San Pedro Bay port officials seem to concur with Freidmann’s observation on surging exports, noting that outbound volumes are approaching record levels.
Kraig Jondle, director of business and trade development at the Port of Los Angeles, says that the existing infrastructure and ongoing expansion of terminals and warehousing will only make the port more attractive for trade in both directions.

“It’s encouraging to see that exports are ramping up,” says Jondle, “but we are forecasting a steady increase in inbound calls, too. We work very closely with the Port of Long Beach to ensure that Southern California can compete with ports anywhere in the nation. We have deep water and a great rail network, so we don’t have to raise bridges or dredge harbors.”

Sean Strawbridge, managing director of trade development and operations at the Port of Long Beach, also points to the cooperative nature of the San Pedro Bay gateways. “We’re seeing record strength in export demand, and are planning for a more balanced trade mix,” he says. “There’s a growing demand for agricultural commodities to be containerized, particularly to China.”

“Regional marketing” is less successful in the Puget Sound, however, where the ports of Seattle and Tacoma are compteting aggressively for new business. When The Grand Alliance—a shipping consortium comprising Hapag-Lloyd, NYK, and OOCL—announced that it plans to move operations from the Port of Seattle to neighboring Tacoma later this year, there came a howl of protest.

“It’s important that the business remains in Washington,” says Linda Styrk, Port of Seattle’s managing director.

“Unfortunately, though many of the jobs will be preserved, others may not. Some who work in the Seattle harbor could see their livelihood impacted severely or in some cases, disappear.”

Lost in this observation, however, is the fact that just three years ago Seattle lured Maersk and CMC-CGM away from Tacoma.

Oakland, meanwhile, attracted its first “mega-vessel” call this year, demonstrating that it can accommodate the new generation of huge container ships. The MSC Fabiola, a 12,562 twenty-foot equivalent-unit (TEU) vessel owned by Geneva-based Mediterranean Shipping Co SA. MSC came steaming into the San Francisco Bay early this year.

While this was largely a symbolic call—it may never be repeated—it demonstrates why the world’s second-largest shipping company is one of the Port of Oakland’s fastest-growing carriers.

Generally, ships arriving at Oakland carry imports such as electronics, wood furniture, apparel, bedding, toys, sports equipment, auto parts, coffee, and bicycles.  When they depart, they carry exports including dried fruit and nuts, wine, rice, cotton, recycled paper and metal scrap, machinery, chilled and frozen meat and poultry, as well as vehicles.

“Our role as a leading export gateway helped us maintain our maritime volumes last year despite a weak economy,” says Oakland Executive Director Omar Benjamin. “Bigger ships are part of growing our exports.”

Walt Rakowich, co-chief executive officer of Prologis, says West Coast ports needn’t be too concerned about losing market share in the near future, either. “There are too many “unknowns” associated with alternatives,” he says. “We don’t know, for example, if the East Coast and Gulf ports will be able to handle the volume when the Panama Canal expansion is completed in 2014. And the concentration of population and industry in California is hard to dismiss.”

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About the Author

Patrick Burnson
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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