New Ocean Carrier Deployments May Have Slight Impact on U.S. Supply Chains
April 21, 2014 - SCMR Editorial
The newly created and expanded alliances of P3 and G6 will certainly review and revise port calls, but the shift in initial deployments will be subtle, says Neil Davidson, senior analyst of ports and terminals for Drewry Research.
“However, it is in the carrier’s best interest to serve as many ports directly as possible in order to offer the best service to cargo owners,” says Davidson.
Furthermore, Davidson says that carriers will still call on all the key ports where there’s a concentration of consumers. “So in this sense there may not be much change to the list of ports called. But bigger ships do mean reduced service frequency, or at least less port calls per year, leading to more peaking of port volumes.”
Davidson says that anticipation of a breakdown in dockside labor contracting on the U.S. West Coast should also be considered when discussing the state of the ports this year. “I imagine that most shippers, through past experience of similar issues, have contingency plans in place for diversions if necessary. Shippers will adopt a wait and see approach though,” he says.
Finally, Davidson adds that the impact of the expanded Panama Canal still remains to be seen. “East Coast U.S. ports are hoping to gain share from the West Coast ports, but they won’t give it up easily,” he notes. “Plus, it’s not just about port capacity, but also about inland and intermodal capacity.”
In addition, there are two key unknowns about the future, says Davidson. First, the level of the new Canal vessel tolls is yet to be determined, and we have yet to see how the U.S. and Canadian railroads will react to the expanded Canal.
“Both of these will have a big influence on which way cargo is routed,” says Davidson. “Most likely time sensitive cargoes will continue to move via the West Coast, but cost sensitive cargoes will be more tempted to use the Canal.”
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