Posted on November 15, 2023
UPDATE FROM AAPA 2023 ANNUAL CONFERENCE
Two weeks ago I attended the American Association of Port Authorities (AAPA) 2023 Annual Conference and had the honor of participating on a panel, “State of the Maritime Industry,” with other maritime executives, to discuss the latest trends, challenges, and opportunities affecting the global maritime sector. The panel covered important topics such as sustainability initiatives, port infrastructure developments, regulatory changes, and international trade dynamics. As I reflect on the conversations we engaged in at the conference, one of the major topics we considered during this panel was “are we ready for tomorrow?” which, to me, resonated more to the tune of “are we equipped to contend with the dynamic supply chain challenges of national demand?”
According to AAPA, seaports and maritime partners sustain over 31 million American jobs and generate $5.4 trillion in economic activity annually. The United States is dependent on international trade which underpins our economy.
In early 2021, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) and Federal Highway Administration (FHWA), released a new version of freight flows forecast data, showing that, between 2020 and 2050, U.S. freight activity will grow by fifty percent in tonnage.
Specifically, container trade handling underpins the entire U.S. economy. In 2022, U.S. container ports handled close to 63 million twenty-foot equivalent units (TEUs), and in 2023, following post-COVID adjustments, U.S. container ports will handle just under 60 million TEUs. By 2040, the U.S. expected containerized trade volume will approach 100 million TEUs.
Policy makers need to understand now how these forces are likely to play out to ensure adequate and timely investment into transport infrastructure that will continue to provide the backbone of U.S. economic development.
Anything that affects the flow of containerized goods will be economically detrimental and present risk to the nation. The onset of the COVID-19 pandemic revealed the major issues in supply chain infrastructure and how cargo concentration is a volatile risk shared throughout the United States trade corridors. Despite the decrease in volume that relieved supply chain pressure since its peak in July 2022, very little has been achieved to correct the fundamental issues or causes for the crisis.
It is clear that the U.S. needs a national container logistics strategy to develop a demand driven infrastructure plan with a long-term outlook to 2040 and beyond. We cannot simply continue to handle all of the expected growth through the top 6-7 largest container gateways in the U.S. and get the cargo to the customer’s door efficiently. What trade flow disruption during the pandemic has taught us is that it is simply not good enough to have a deep waterway and a port that can handle the volume when this only creates severely strained inland systems. By distributing cargo loads across a greater number of ports, we will simultaneously de-risk the intensity and de-risk the problem of any single port being constrained or not functioning efficiently.
When looking at the big picture, the solution does not only lie in deconcentrating port systems. There is a dire need for a comprehensive supply chain infrastructure plan to get cargo to the customers door. By working together to reinforce intermodal supply chain logistics and create resilient and efficient inland systems, we can ensure cargo gets to the customer’s door efficiently. There are significant challenges ahead to ensure we are partnering with key stakeholders including cargo owners, port authorities, regulatory agencies and liner companies to build dock-to-door supply chains which are sustainable and resilient.
While I am proud of the progress we are making as a company, I also recognize our need to engage more directly with our intermodal counterparts and our colleagues in Congress to mobilize a comprehensive effort for all key players in the nation’s supply chain infrastructure because the risks presented are both an economic issue and a national security issue.
Only by adopting a demand driven forecast of what our needs are from a trade perspective coupled with understanding what our needs are from a market perspective, we can build the appropriate capabilities and capacity to serve our needs in 2040 and beyond.
We at Ports America believe in the power of progressive thinking and looking at the big picture. It is this very mindset that has guided our success as a company, pushing us to not only adapt, but to lead, to set benchmarks, and to challenge the status-quo.
For Ports America, this means that the development and operation of asset based marine container terminals is the core to our business strategy and our key to continued growth. This by itself is not enough, we need to engage more directly with beneficial cargo owners leveraging our assets to develop products and solutions for these customers while continuing to provide safe and efficient service to our liner customers.