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West Coast Ports Emphasize Competitive Edge

Apr 2, 2010 Port

Transportation interests agree that West Coast ports are well-positioned to capture a significant share of the cargo growth that will occur in the coming years, but they emphasized that the ports must earn their share of imports from Asia by providing an efficient, predictable and reliable environment for cargo handling.

The West Coast is the natural gateway for trans-Pacific trade, as evidenced by the fact that almost 70 percent of U.S. imports from Asia move through the six container ports on the coast, according to speakers who addressed the Long Beach Pulse of the Ports seminar Wednesday.

However, the West Coast share is down from around 80 percent in the early 1990s, as ports in Canada and on the U.S. East and Gulf coasts marketed their gateways as being lower cost than West Coast ports and free from the cargo fees in Los Angeles-Long Beach that have surprised shippers and carriers in recent years.

The long-awaited trade recovery appears to be underway, with cargo volumes in January and February up about 15 percent compared to the unusually weak first two months of 2009.

However, with retail sales up only about 1 percent, and housing foreclosures and unemployment rates continuing to be a drag on the economy, most transportation experts are predicting modest single-digit growth in imports during the coming year.

West Coast ports will have no trouble handling short-term growth, even if it returns to double-digits over the next few years. Industry predictions earlier in the decade that Los Angeles-Long Beach would reach capacity around 2010 now appear to be way out of line as the ports have resumed expansion of marine terminal and intermodal facilities and have extended their gate hours.

Geographically and logistically, "the West Coast is the best coast" for trade with Asia, said Fred Malesa, vice president of international intermodal at BNSF Railway. With 110 weekly vessel calls and more than 300 eastbound intermodal train departures each week, West Coast ports provide the reach, capacity, speed, service and green operations needed to accommodate growing cargo volumes, Malesa said.

However, West Coast ports, especially Los Angeles-Long Beach, have lost market share despite these advantages. "This is an expensive place. There are interesting and cheaper alternatives available," said Wolfgang Freese, president of Hapag-Lloyd (America).

Freese said the widening of the Panama Canal in 2014 will further enhance the economics of calling at East and Gulf Coast ports by allowing bigger ships with lower per-slot costs to call at eastern ports.

On the other hand, the logistical advantages of trans-loading cargo at West Coast distribution centers can be a positive factor in cargo retention. Jeff Siewert, director of international logistics at the Home Depot, said the home-improvement retailer may increase the volume of discretionary cargo it ships through the West Coast as it looks for ways to connect its import and domestic networks for optimal performance of its supply chain.


(Source: www.joc.com)

 
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