By Mark Edward Nero
Ports of the Pacific
An agreement between the ports of Seattle and Tacoma, Washington was finalized with federal approval last August, making the newly-formed Seaport Alliance the fourth-largest container gateway for containerized cargo shipping between Asia and major distribution points in the Midwest, Ohio Valley and the East Coast. Photo courtesy of the Northwest Seaport Alliance.
The majority of consumer goods that enter North America from Asia come through west coast seaports. But according to an April 2016 report by Los Angeles-based commercial real estate services and investment firm CBRE Group, the balance of seaborne-cargo delivery in the US continued a shift east over the last year, resulting in East Coast seaports making gains against their west coast counterparts.
The renewed momentum for eastern ports over the past year was attributed in part as a response to last year's labor strife at primary west coast ports. Cargo traffic at western ports was slowed for months before port management, represented by the Pacific Maritime Association, reached a five-year contract agreement in March 2015 with the International Longshore & Warehouse Union.
The west coast labor disruption indirectly contributed to two East Coast ports and one Gulf Coast port climbing in CBRE's annual North American Seaports and Logistics Index. The Port of New York & New Jersey, Port of Savannah and the Port of Houston all gained ground in the top 10 rankings, while the ports in Los Angeles, Oakland and Seattle-Tacoma all fell.
Overall, the major East and Gulf Coast ports accounted for nearly all of North America's gain last year in cargo volume, eating away at the west coast's dominance. west coast ports accounted for 52 percent of all 20-foot equivalent units volume last year in North America, down from 54 percent in 2014 and 57 percent in 2010.
With increased competition from the East Coast, plus a $5 billion expansion of the Panama Canal expected to be inaugurated later this year, the west coast's major ports – including those in Los Angeles, Long Beach, Vancouver, Seattle-Tacoma and Oakland – are doing what they can to stay relevant in an increasingly competitive field. All have been engaging in major infrastructure projects and/or growth strategies to maintain or increase their market share.
The adjoining ports of Los Angeles and Long Beach may be the largest, busiest maritime gateway on the west coast, but the Port of Vancouver in British Columbia has been making strides and now stands as North America's third-busiest gateway. Independent forecasts show Vancouver's container trade is growing at a rate of about 4.5 percent annually.
The Port of Vancouver, which was officially known as Port Metro Vancouver until an official name change in April, isn't just Canada's largest port, it's the most diverse in North America in terms of the range of cargo it handles: it is home to 27 major marine cargo terminals, three Class 1 railroads and is responsible for Canada's trade with more than 170 world economies.
"Trade through the Port of Vancouver continues to be strong, driven by Canadian demand for foreign products and international demand for Canadian resources and agricultural goods," Jordan Kajfasz, the port's trade development manager told Pacific Maritime Magazine.
Despite the west coast losing market share in recent times, container traffic through Canada's Pacific Gateway is projected to double over the next 10 to 15 years. One way the Port of Vancouver intends to meet anticipated traffic growth is what it calls its Container Capacity Improvement Program, a long-term strategy to ensure the timely delivery of required container infrastructure.
Components of the program include increasing the capacity and efficiency of existing container terminals; converting existing under-utilized terminals to handle containers; and construction of a new terminal.
The port's proposed Centerm Expansion Project is a series of improvements to increase the number of containers that can be handled at the existing terminal by about two-thirds, from a current annual maximum capacity of 900,000 TEUs to 1.5 million units. The proposed improvements include an expansion of the terminal area, reconfiguration of the terminal, and road and rail access improvements.
Also, Vancouver's Roberts Bank Terminal 2 Project is a proposed new three-berth container terminal at Roberts Bank in Delta, British Columbia. The terminal would offer 2.4 million TEUs of container capacity and would be needed if the projected doubling of container volume turns out to be accurate.
"Our existing container terminals are not enough to manage this growth," Kajfasz said. "Our role, as a port authority, is to work with terminal operators and others to make sure the port is ready to handle what Canada wants to trade."
South of the border in the Seattle-Tacoma area, it's been just over a year since the June 2015 announcement that the two regional seaports were forming an agreement called the Northwest Seaport Alliance in order to better compete for business. Under the unprecedented agreement Seattle and Tacoma unified management of their marine cargo facilities under one umbrella.
The agreement was finalized with federal approval last August, and since then, the Seaport Alliance has become the fourth-largest container gateway for containerized cargo shipping between Asia and major distribution points in the Midwest, Ohio Valley and the East Coast.
Seaport Alliance spokeswoman Tara Mattina told pacific maritime magazine that while the facilities managed by the Alliance already have the naturally deep water to accommodate large ships, some terminal facilities and the connecting road/rail infrastructure need to be upgraded to improve cargo velocity through the system.
"In order to respond to the market demand, we need to continue to invest in our waterways, terminals and the road/rail network," she said.
Currently, about $150 million in upgrades and new cranes have been authorized for Husky Terminal in Tacoma, while improvements to Terminal 5 in Seattle are in the midst of environmental review and design.
"While these projects will take considerable money to complete, we can look at the investments as a gateway rather than two individual ports competing against each other," Mattina said. "These strategic investments present great opportunities for us to prepare for future success and continue to provide the state valuable middle-class jobs in the maritime industry."
Further south, in Northern California, the Port of Oakland has improved its infrastructure – dredging to 50 feet, lifting crane heights – and worked with its maritime partners – terminal operators, longshore labor, San Francisco Bar Pilots – to become one of the relatively few US ports currently handling megaships.
Port of Oakland Communications Director Mike Zampa told Pacific Maritime Magazine that Oakland's plan is to grow market share through logistics developments that are currently underway or soon taking shape.
Among those logistics developments: a new 14-track railyard to accommodate unit trains; a 20-acre Seaport Logistics Complex for transloading, cross-dock and warehousing; a 370,000-square-foot cold storage facility to increase Oakland's ability to handle beef, poultry and pork exports; and expanded operations for containerized grain imports and exports.
At the same time, the port has transformed its operating profile to improve cargo-handling performance. Key changes include adding night and weekend gate operations, moving more transactions to express or off-site locations, developing automated marine terminal performance metrics and adding labor to handle growing cargo volume.
"These will make Oakland one of the nation's leading trade and logistics gateways," Zampa said."
"What's important is that all of this is being done in collaboration with stakeholders ranging from labor and management to shipping lines, truckers, cargo owners and US Customs," Zampa said. "But the port is also concentrating on improving performance, reliability and overall customer service. Without those, growth doesn't happen."
The CBRE's annual Seaports & Logistics Index lists the Port of Los Angeles as the no. 2 port on its list after the Port of Long Beach, but when it comes to container volumes, LA is still no. 1 by a wide margin. In 2015, POLA terminals handled a grand total of 8.1 million TEUs, which was down 2.1 percent from 2014's 8.34 million TEUs, but still ahead of the 7.1 million containers Long Beach moved in 2015 and the 3.1 million TEUs the Port of Vancouver saw.
But despite having such a wide lead, the port is not just sitting pretty, its director of cargo marketing, Eric Caris, told pacific maritime magazine.
""We are always looking to grow our business and our market share," he said. "We've invested heavily to make sure that we're the most relevant gateway for the country."
Those major investments include the development and redevelopment of multiple areas, including the port's TraPac terminal, which, after being under construction since 2012, is now in the final stages of development. The 173-acre TraPac, which has been under redevelopment the past few years, aims to be the first automated terminal on the west coast, will feature not only self-driving cranes and automated carriers, but also on-dock rail for the first time.
The port also is engaged in a roughly $200 million project to renovate and modernize its 300-acre APL container terminal, plus is deepening the wharves at its Yusen and Everport terminals.
"Infrastructure improvements are ongoing. The Port of LA has been very committed to the import/export community and we're in the midst of a very significant capital improvement program," he said. "We fight for every TEU – every box matters to us."
Atop this year's CBRE performance index is the Port of Long Beach, a position it earned in part because of the arrival of a new Asian shipping line in 2015.
"In 2015 we stabilized cargo diversion and began to recapture lost market share, increasing Southern California's share from 38 percent to 40 percent," POLB Chief Executive Jon Slangerup told pacific maritime magazine. "But given the increased competition for our cargo, and the economic benefits for Southern California that come with it, we will continue to work aggressively to strengthen our value proposition and increase market share."
The Port of Vancouver, BC's proposed Centerm Expansion Project is a series of improvements to increase the number of containers that can be handled at the existing terminal by about two-thirds. Photo courtesy of the Port of Vancouver, BC.
Long Beach is currently engaged in a 10-year $4 billion capital improvement effort program that includes doubling its on-dock rail capacity, redeveloping our marine terminals and expanding our bridge and roadway infrastructure. The program is just one aspect of an effort to strengthen its competitiveness by increasing its overall cargo handling capacity by 20 percent.
Long Beach has also implemented a dual Long Beach/LA supply chain optimization initiative which has engaged all key stakeholders – including ocean carriers, shippers, terminal operators, truckers and railroads – working together to improve efficiency, reliability and velocity of goods movement through the Southern California gateway.
"Our modernization projects – more than $4 billion worth this decade alone – will all help maintain and improve the port's competitiveness, particularly as it relates to handling the world's largest container ships," Slangerup said. "Our value proposition is simple – we're the shortest, fastest and cheapest route from Asia to America's consumer markets west of the Mississippi River."