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US ports: battling for cargo

Port Everglades has made significant investment in infrastructure, including installing new super-post-Panamax cranes (pictured)

Posted on August 9, 2023

While US West Coast ports have welcomed a tentative labour agreement, US East Coast ports are trying to capture cargo through their gateways.

US West Coast ports have welcomed a labour agreement in what was described as a “monumental day” by the Port of Oakland.

The Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) announced a tentative agreement on a six-year contract covering workers at all 29 West Coast ports in June this year.

Negotiations between the ILWU and PMA began in May 2022 regarding the contract, which expired two months later.

Port of Long Beach (PoLB) executive director Mario Cordero says, “With no labour strife, there will be much less disruption. We now have shipper confidence, but even throughout negotiations, cargo was moving through the port. We are thankful that when they first started negotiating, they committed to no slow down or strikes, so speaking for Long Beach, we did not have disrupted cargo movements.”

Nevertheless, some cargo that used to go via the US West Coast has moved to other port gateways in the US, with reasons including nervousness about the labour negotiations. When asked about this, Mr Cordero says, “We are hoping to win back some of this cargo. The American shipper has choices now, unlike 10 or 20 years ago, when a lot of people talked about the West Coast share of Asia trade. But other gateways in the US have improved their infrastructure, so we on the West Coast have experienced incremental loss of discretionary cargo but I don’t believe it will be anything significant. We [Long Beach] will continue be part of the US’ largest containerised gateway.”

After seeing reduced cargo volumes at the beginning of the year, PoLB saw an uptick in volumes in April and a 15% increase in May – the best month since August 2022. Mr Cordero comments, “America’s economy is very resilient, and consumers continue to spend… in 2022 and 2021 we had unprecedented growth, now we are back to normality.”

Elsewhere, five California seaports – ports of Los Angeles, Long Beach, Oakland, Hueneme and San Diego – have signed a memorandum of understanding (MoU) launching the California Port Data Partnership.

The MoU outlines an agreement among the five ports to jointly advance computerised and cloud-based data interoperability with a common goal of supporting improved freight system resilience, goods movement efficiency, emissions reduction and economic competitiveness.

Mr Cordero comments, “Every sector in our industry is moving forward with data sharing technology, they all have their own portals and platforms, so to have one portal that everybody uses is a great vision… you can integrate into the system with your own platform.”

Port of Long Beach has signed a memorandum of understanding launching the California Port Data Partnership

Florida ports club together 

Port Everglades is working together with its neighbouring ports and its marine terminal operators to meet South Florida’s burgeoning consumer demands.

Key to this strategy is Florida’s desire to provide a diversified route for shippers and carriers operating between Asia and the US, offering them an alternative to travelling via the US West Coast.

Port Everglades chief executive officer and port director Jonathan Daniels explains how diversification is an important focus for Port Everglades, traditionally a North-South container port. Serving as an important link to Central and South America, it aims to ramp up its East-West links to Asia. And to this end, it is succeeding, having won some milestone contracts in the last year.

In 2022, it scooped a new service from MSC, whereby it served on multiple separate routes to the US East Coast from India, Asia, Turkey and Greece. This was the first Asia service Port Everglades has seen since 2011. While this service went through a reformat and stopped calling at Port Everglades, the port has snapped up another milestone reconstituted MSC service, this time the Santana loop, which officially launched on 5 August this year. Port Everglades is the first US port of call as part on its East Coast string.

Mr Daniels says, “We are developing business in the East-West trade to meet supplier- and consumer-driven demands. There are a lot of distribution centres in South Florida that are filled with cargo from Asia, so we are trying to diversify in addition to our strengths in the South and Central America trade.

“In South Florida, traditionally the East-West trades were the strength of PortMiami, but no port [in Florida] is large enough to handle everything that is coming to the consumption zone that is South Florida. We are both looking at providing a series of offerings at our respective ports so neither one handles purely East-West or North-South cargo, but rather we work as one larger port complex in South Florida.”

Indeed, Port Everglades and PortMiami are working together with Port of Tampa Bay and Jacksonville Port Authority to show shippers and carriers the East Coast of the US is an alternative to the US West Coast.

Mr Daniels comments, “While we understand the Asia to US West Coast is a long-established trade lane, we are providing another option as carriers and shippers deal with a variety of issues that occur on the US West Coast. It is a smart business opportunity for all of us to look at, and we have been aggressive in our marketing in concert with the Florida Ports Council to make sure the carriers understand there are alternatives.”

Port Everglades’ new East-West service, as well as it scooping other new North-South slings, helped it achieve record volumes in 2022. Indeed, the port only missed beating its record 2018 year by two hours. “We do not include containers until the lines of the ship have been cast off, and although the cargo on the vessel was there, the lines were not cast off in time for us to count those boxes due to a forecasted hurricane,” recalls Mr Daniels.

“The MSC service boosted our numbers. We also had a brand-new service from CMA CGM between the West Coast of South America to the East Coast US, and two smaller services to South and Central America – ShipLilly and HLS from Honduras.”

He says the port forecasts similar volume figures this year – more than 1.1M TEU.

The port has also nearly finished its Southport Turning Notch Extension Project. This is the largest project ever undertaken by the port, at a cost of US$471M, and will add five berths, six super post-Panamax cranes, and install a gantry rail.

Another important topic for the port is to have private-sector investment in warehouse capacity. Mr Daniels says, “While the port is expanding its warehouse capacity, there is a move by the private sector to provide additional complexes.”

To this end, an 18,600-m2 warehouse has almost been completed (just outside the port gates) and a second has started construction, slated to be finished in mid-2024. Together, the two will add 37,000-m2 of warehouse cargo capacity.

Mr Daniels says, “This is needed, and it is good to see the private sector step up.”
A solid position in the North-South trade, a bolstering of its diversification strategy and the almost-completion of its largest-ever project, puts Port Everglades in a strong position for the coming years.

Garden City Terminal’s newly renovated Berth 1

Savannah boosts share 

According to the most recent PIERS data, the Port of Savannah achieved 11.2% market share in container trade among US ports on the East, West and Gulf coasts through April, its highest ever.

“This continues a trend stemming from the US southeast’s fast-growing population, increased domestic production and a shift in overseas manufacturing toward India and southeast Asia, favouring delivery via Savannah,” says Georgia Ports Authority (GPA) president and chief executive Griff Lynch. “I’d like to commend GPA employees, and our partners at Gateway Terminals and the International Longshoremen’s Association for their outstanding work during our second-busiest year ever.”

The fiscal year just ended was GPA’s second busiest on record. A total of 5.4M TEU crossed GPA docks in 2023, down 6.7% or 387,000 TEU compared with 2022, GPA’s all-time high. However, when compared with prepandemic volumes of 4.5M TEU in 2019, GPA’s performance achieved an increase of 20%. Its compound annual growth rate since 2019 is 4.7% per year.

“As the nation’s fastest-growing region, the South is seeing increased consumer demand, which translates into higher port volumes,” Mr Lynch says. “The area has also seen strong growth in manufacturing, including the recent announcement of the Hyundai Metaplant. The carmaker is poised to establish a whole new ecosystem of auto manufacturing and ancillary suppliers moving cargo through Georgia’s deepwater ports.”

Mr Lynch says producers are drawn to the Port of Savannah’s market area by the South’s lower operating costs, growing population base and logistical advantages. The Port of Savannah features the most direct global port-to-port connections of any US port besides New York-New Jersey.

In addition to people moving to the US South, a growing percentage of cargo has also been shifting from the West Coast to Savannah. GPA’s share of the US container market has expanded from 7.8% in 2014 to a record 11.4% in 2023. Georgia Ports now handles nearly one out of every eight loaded twenty-foot equivalent container units (TEU) in the US.

Among global container ports, rising trade in agriculture, retail and manufactured goods has improved Savannah’s rank from 46th to 27th worldwide since 2006.

Along with Savannah’s growing prominence, Mr Lynch says shippers are now exhibiting a ’China Plus 1’ policy. Under this strategy, shippers are maintaining significant production capability in China, while adding secondary manufacturing locations to diversify supply chains.

From 2018 to 2022, imports flowing from China through the Port of Savannah dipped from 49% of the port’s total imports to 41%. The shift occurred as manufacturers added factories in growing markets such as Vietnam, South Korea, Thailand and India.

“The question is, who is going to be the big China Plus 1 winner?” Mr Lynch asks. “In our view, India is well positioned to take on significant volumes.”

He says cargo from India favours the Suez Canal to reach the US, benefiting the US East Coast and Savannah.

“As the southeastern port with the most direct global routes, Savannah is better connected to emerging markets,” says GPA board chairman Kent Fountain. “Georgia Ports already delivers on reliability and cost. GPA will now also provide a five-day advantage on ocean transit compared to West Coast delivery from India.”

The market forces sending more cargo to Savannah come while GPA is adding massive new capacity. GPA has US$1.9Bn in infrastructure projects under way, which will refurbish three berths to accommodate big ships, and add 3.5M TEU of new annual terminal capacity.

The Georgia Ports Authority has had a long-time investment philosophy of maintaining capacity at least 20% above current demand. However, the exponential and unexpected cargo growth over the past two years took up that extra capacity, which is important for ensuring cargo fluidity, says Mr Lynch.

“GPA is now adding capacity across its berths, container yards, truck gates and its marine and inland rail yards to restore that buffer. By expediting these investments, GPA will ensure its customers of the free flow of cargo crossing its terminals – both today and as customers grow their businesses.

“This is part of our over-arching drive to deliver the world-class customer service that makes Georgia the nation’s easiest port to do business with.”

GPA has just reopened its renovated Container Berth 1 at the Port of Savannah’s Garden City Terminal. In tandem with recently commissioned ship-to-shore cranes, this portion of the docks are now able to handle 16,000+ TEU vessels, increasing Savannah’s annual berth capacity by 1.5M TEU, or 25%.

GPA has ordered eight new ship-to-shore cranes. The first four arrived in February and will be operational in July; the next four arrive in August and will be operational by December.

The Garden City Terminal West expansion will add 1M TEU of annual capacity. Supported by 15 electric rubber-tired gantry cranes, the 100-acre site will be completed in phases in 2023 and 2024.

GPA is expanding its container operation at the Port of Savannah’s Ocean Terminal to take in the entire 200-acre facility. Berth and container yard renovations will allow Ocean Terminal to serve two big ships simultaneously and expand the terminal’s annual capacity to 2M TEU. Eight additional cranes have been ordered as part of the project. Renovations to the first berth will be completed in 2025, with the second completed in 2026.


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