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Top 30 U.S. Ports 2019: Trade tensions determine where cargo goes next

Amid the constant change in trade agreements and protocols, logistics managers are faced with the daunting challenge of finding the right ports at the right moment. Analysts contend that the surge in imports to West Coast ocean cargo gateways may have been an aberration, as East and Gulf coast contenders are now grabbing market share.

International trade tensions, notwithstanding, the U.S. coastal port sector created 2.2 million jobs last year as marine cargo activity generated about $5.4 trillion of total economic activity.

According to the recently released report “2018 National Economic Impact of the U.S. Coastal Port System,” underlying trends suggest that logistics managers will continue to rely on a diverse mix of ocean cargo gateways in the future.

Martin Associates, a consultancy working with the American Association of Port Authorities (AAPA), notes in the report that, over the past five years, Federal, state and local tax revenues generated by port-sector and importer/exporter revenues rose nearly 18% from $321.1 billion to $378.1 billion, while personal wages and local consumption related to the port-sector increased from $1.1 trillion to $1.4 trillion. Furthermore, the average annual salary of those directly employed by port-related businesses jumped from $53,723 to $62,800—a 17% increase.

John Martin, president and founder of the Lancaster, Pa.-based firm, presented the report at last month’s AAPA 2019 Spring Conference in Washington, D.C. “The sizable growth over the past five years in the number of jobs that American deep-draft ports support, the wages those jobs pay, and the tax revenues that are collected from the cargo activities at these ports is really quite impressive,” he says.

Top 30 U.S. Ports

Import TEUs 2018   20172017
2018 RankPortTEUs% of Total% of Change5 year CAGRTEUsRank
1Los Angeles5,039,36317.40%5.40%3.10%4,782,7371
2Long Beach4,364,77115.10%6.80%3.40%4,088,2962
3Newark/New York4,196,37214.50%12.80%6.40%3,718,6073
12Port Everglades728,4612.50%2.00%3.70%714,19911
15New Orleans344,6971.20%17.00%8.40%294,70415
16San Juan, PR338,5271.20%24.80%2.50%271,19117
18Willmington, DE196,9940.70%3.40%2.90%190,50818
21West Palm Beach161,1830.60%9.20%2.90%147,65220
22Wilmington, NC125,8630.40%36.20%2.80%92,40924
23Chester, PA101,0100.30%-0.30%12.30%101,28823
24Gulfport, MI100,1890.30%-6.90%-0.90%107,66022
25San Diego69,0670.20%9.50%7.20%63,09426
26Port Hueneme68,0980.20%-1.00%7.20%68,81025
28Freeport, TX47,2170.20%-2.60%-1.80%48,50027
30Everett, WA33,7260.10%-2.50%1.80%34,60729
National 28,939,514 7.80%4.50%26,839,589 

Source: Panjiva

However, is this growth sustainable without more federal government investment? Port association leaders think not.

Kurt Nagle, president and CEO of the AAPA, maintains that the need for this is significant and urgent. “We have identified a combined $66 billion in needed investments over the next decade,” he says. “These necessary federal channel, terminal, road, rail, bridge and tunnel improvements are crucial to enable our seaports to efficiently handle their expected cargo volumes and continue to provide positive effects on the local economies.”

Significant milestone reached by America’s inland ports

This year marks the 60th anniversary of the opening of the St. Lawrence Seaway, the waterway connecting ports on the East Coast to the Great Lakes and America’s heartland.

Long regarded as North America’s “Fourth Sea Coast,” the Great Lakes Seaway System represents an economic powerhouse unto itself.

“With a GDP of $6 trillion, the Great Lakes region would be the third largest economy in the world if it were a country,” says Craig Middlebrook, deputy administrator of the Saint Lawrence Seaway Development Corporation (SLSDC). “State and local economies in Minnesota, Wisconsin, Illinois, Michigan, Indiana, Ohio, Pennsylvania and New York are benefitting from the surge in shipping in the seaway.”

This year also marks the completion of a decade of infrastructure rehabilitation and maintenance work at the U.S. locks under the ground-breaking Seaway Asset Renewal Program.

Through the first 10 years of this program, the SLSDC has obligated $152 million on 50 separate projects. Several projects involve the implementation of new innovations and improved technologies for the operation of Seaway infrastructure, resulting in reduced maintenance needs and operating costs to seaway users.

“One of the projects involves the installation of a unique, first-of-its-kind, hands-free mooring technology system in the locks,” observes Middlebrook. “The system uses vacuum pads, each of which provides up to 20 tons of holding force, mounted on vertical rails inside the lock chamber wall to secure the ship during the lockage process as it is raised or lowered while keeping it at a fixed distance from the lock wall.”

Ideally, the hands-free technology will increase efficiency, improve safety, reduce operating costs to seaway users, and reduce lock transit times by nearly seven minutes per lockage— equating to three hours to four hours of potential time-saving on a round trip transit.

Port authorities hope that the use of new technology will also significantly increase the pool of vessels worldwide that will be able to enter the Great Lakes Seaway System. “It’s arguably the most important technological advance at the seaway since 1959 and will revolutionize the vessel transit experience through the seaway,” says Middlebrook.

Resiliency factor

However, the solvency of “Top 30 U.S. Ports” is hardly in question, says Fitch Ratings’ senior director, Emma Griffith, who notes that shifts in centers of production, and the advent of disruptive technologies add further complexity to cargo throughput levels.

“Major ocean cargo gateways remain resilient,” says Griffith, “and this trend has been evident over the past decade with container traffic outpacing economic growth rates despite volatility through the last recession.”

However, Griffith adds that increasing vessel sizes coupled with supporting infrastructure may be reaching a maturation level. “Growth rates are slowing relative to historical averages as these trends mature. And volume growth, while expected to continue, will likely more closely mirror that of global GDP.”

Regarding U.S.-China trade relations, primary ports of call will be able to “weather the storm” despite elevated concentration in Chinese trade exposure in some cases, says Griffith. “Conversely, smaller and more specialized ports will have less leeway to offset major losses in imports and exports if commodities handled are targeted by tariffs.”

Finally, recent changes in trade policy between Asia and the United States are clouding future performance of the Panama Canal’s container business, Fitch Ratings concludes. “Some ports may be investing too much and too quickly in mega cranes and warehousing in misguided anticipation of attracting more cargo,” says Griffith. “But then again, they might be right. For the time being, most major ports in the United States and elsewhere are taking an ambitious approach toward growth.”

East Coast “usurpers”

The global trade intelligence firm Panjiva notes that while Los Angeles and Long Beach continue to hold the crown, the Port of New York and New Jersey plays “the usurper.”

“U.S. seaports had a bumper year in 2018 with a 7.8% year-over-year growth in seaborne shipments to reach a record 28.9 million twenty-foot equivalent units [TEUs],” says Chris Rogers, research director at Panjiva. “A late surge in shipments from China, driven by tariffs, was the largest factor, though shipments from South Korea also did thrust due to the strong economy earlier in the year.”

According to Rogers, the outperformance of Asia versus Europe in terms of exports to the United States was not a major factor in individual port performance, however. Imports to Los Angeles and Long Beach, which retained their dominance as the largest ports for inbound shipments with 17.4% and 15.1% of the total respectively, lagged the average with growth of just 5.4% and 6.8% respectively. Instead, shipments to the West Coast appear to have prioritized the smaller ports including Seattle—which grew 27.5% and outpaced its neighbor Tacoma—and Oakland, which climbed 9.4%.

New York came closer than ever to overtaking Long Beach as the 2nd largest port for imports after the raising of the Bayonne Bridge and investments by Maersk in new cranes allowed a 12.8% rise in shipments, leaving it with a 14.5% share of all seaborne imports to the United States.

The widening of the Panama Canal in 2016 has served to help ports in the southwest of the United States as the container alliances continued to rearrange their services. Imports to Miami and New Orleans rose 20.8% and 12.1% respectively while Houston remained capacity constrained, growing by only 6%.

In the end, investments in new capacity also likely helped Savannah’s 10.8% expansion that, along with New York and southeast port growth, likely took market share from Norfolk, which grew by only 1.5%, and Charleston, which had shipments climb by only 2.8%.

Three U.S. ports announce global carrier agreements in new foreign markets

Several new ocean cargo vessel deployment announcements suggest that shippers are reconfiguring supply chains to accommodate uncertainty in the global trade arena.

With tensions mounting in China, the Port of Oakland will add new direct service to Vietnam in May. Pacific International Lines (PIL) will launch direct Vietnam links using vessels that can carry up to 11,900 TEUs. The new service is called AC5 and is in partnership with Cosco and Wan Hai.

“PIL’s new direct service from Oakland is a good sign of increasing demand on Vietnam routes,” says the port’s maritime director John Driscoll. “Vietnam is showing strong growth in its import and export markets.”

In 2018, Vietnam was the Port of Oakland’s 3rd largest import market and 5th largest export market. When measured by volume, American exports to Vietnam from Oakland have grown by 126% since 2015, while imports from Vietnam have grown 29% in the same timeframe.

Meanwhile, French container shipping giant CMA CGM will begin serving Port Tampa Bay in late May on its Pacific Express 3 (PEX3) service. The new service rotation will be: Singapore; Vung Tau; Hong Kong; Shekou; Ningbo; Shanghai; Busan; Panama Canal; Houston; Mobile; New Orleans; Tampa; Miami; Singapore.

“This is a further testament to the growth of the U.S. Gulf market and the significance of the Tampa Bay/I-4 Corridor region, home to the state’s largest concentration of distribution centers, which has become the heartbeat of Florida’s international trade,” says Paul Anderson, Port Tampa Bay president and CEO,

The port recently added two post-Panamax cranes to complement three existing gantry cranes and implemented a phased build-out plan to quadruple capacity over the next few years. Port Tampa Bay is also investing in new facilities to diversify its service.

Finally, Seaboard Marine is launching a new direct, all-water service that connects North Central America to the Port of Savannah. The first vessel is scheduled to depart the Port of Savannah in May. The service will include two Seaboard Marine vessels and will provide both refrigerated and dry container service to and from Savannah.

“The new North Central American service and the addition of Port of Savannah is an ideal gateway,” says Jose Concepcion, Seaboard’s vice president of Central America. “It opens markets in Central America to local exporters by providing the most efficient route available to Guatemala, El Salvador, Nicaragua and Honduras.”

Concepcion adds that the Port of Savannah enables Seaboard Marine to address the personalized needs of shippers by expanding its service network in the Western Hemisphere.

“So far, 2019 has proven more difficult with an unwinding of the late inventory combining with a weaker international trade environment to create a challenging situation for the ports,” concludes Rogers. “In the meantime, investments to reduce congestion including harbor deepening, new cranes, automation, inland port construction and alternative drayage systems such as barges will be needed to ensure the long-term growth of the nation’s maritime trade economy.”

Labor versus technology

Descartes, a consultancy and software-as-a-service provider for logistics management, recently shared similar observations on the top U.S. ports, noting that the advent of new information technologies is not likely to displace dockworkers in the near future.

“We feel that organized labor is receptive to more automation, but perhaps not at the same pace as management would like,” says Brendan McCahill, senior vice president of trade data content at Descartes. “In all the top ports, automation is already employed with gate movements, container stacking, cargo releases and the cycling of containers in the loading and unloading process.”

McCahill is less certain that artificial intelligence (AI) and blockchain will be as transformative in port operations near-term, however. “Financial innovation cuts close to the bone, and it seems that AI and blockchain are often in the same sentence as bitcoin, so there’s some skepticism there,” he says. Meanwhile, he believes that ports will attempt to keep pace with utilizing technologies embraced by mega shippers, like Walmart.

“These will likely differ by the available capitalization,” concludes McCahill, “but just as we saw more computerization and digitalization take hold in the past century, it’s only a matter of time.” 

Port of Long Beach outlines its growth strategy

While logistics managers charged with moving cargo through San Pedro Bay’s mega ports of Los Angeles and Long Beach often perceive them as a single entity, the two international gateways continue to find ways to differentiate their services.

The most recent example of this came last month with news that the Long Beach Board of Harbor Commissioners approved an updated “Strategic Plan” for the port, laying out key goals and objectives.

Chief among the six strategic goals contained in the update is the “strengthening of its competitive position” by utilizing more efficient container operations at its terminals.

At the same time, the port wishes to maintain financial strength and security of assets while developing and maintaining state-of-the-art infrastructure.

“As Harbor Commissioners, we have a responsibility to ensure that the Port is doing everything it can to meet the needs of our customers, our industry and the community we serve,” said Tracy Egoscue, president of the Long Beach Board of Harbor Commissioners.

“This updated Strategic Plan will guide our team as we meet the challenges and opportunities ahead.”

According to Egoscue, the port will also have an opportunity to showcase its unique offerings when it plays host once again to the annual meeting of the Intermodal Association of North America (IANA) in September. Meanwhile, industry analysts will keep a keen eye focused on how one particular faction will greet the investment of new technologies and the emphasis on dockside efficiency.

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About the Author

Patrick Burnson's avatar
Patrick Burnson
Mr. Burnson is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts.
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