Bill Mongelluzzo, February 2, 2015, JOC.com
Overwhelmed by congestion and hampered by International Longshore and Warehouse Union work slowdowns, West Coast ports saw their container volume drop 6 percent in December. For calendar year 2014, the ports were barely able to register a 1 percent gain.
The container volumes were posted Monday on the website of the Pacific Maritime Association. They show that all of the major gateways — Los Angeles-Long Beach, Oakland, Portland and Seattle-Tacoma — experienced a decline in container volumes in December compared to December 2013. The Southern California port complex, which accounts for 64 percent of the total container volume on the West Coast, was the only region to register a year-over-year increase in calendar year container volume. Numbers posted on the PMA website refer to loaded containers.
When compared to container volumes posted recently by other major U.S. gateways such as New York-New Jersey, Virginia, Charleston, Savannah and Houston, the West Coast ports’ performance imply that a major opportunity for growth in a recovering national economy was squandered. Although two-thirds of the U.S. population lives in the eastern half of the country, West Coast ports have traditionally been an important gateway for imports from Asia to the entire nation. West Coast ports until recent years handled slightly more than 50 percent of total U.S. container volume. That market share has dwindled slowly but steadily to about 47 percent.
When JOC Group’s PIERS unit reports calendar year 2014 statistics, the numbers are likely to show that port congestion and almost nine months of bargaining between the PMA and ILWU on a new waterfront contract took a heavy toll on West Coast ports. Container diversion to East and Gulf Coast ports, and to ports on Canada’s Pacific coast, accelerated after ILWU work slowdowns began in late October.
Container volume in New York-New Jersey, which accounts for about 30 percent of the East Coast’s total, increased 5.4 percent in calendar year 2014 compared to 2013, setting a new record. ExpressRail, which connects the marine terminals to the intermodal rail network, also set a record, increasing 9.3 percent from 2013. That indicates that New York-New Jersey handled a larger volume of intermodal containers destined for inland cities, with some of that volume likely being diverted from West Coast services.
The Virginia ports set a record in 2014, with total container volume increasing 7.6 percent from 2013. Container traffic surged in December, increasing 12.3 percent compared to 2013. Container volume in Charleston increased 12 percent in 2014. December was especially strong, with container volume up 14 percent year-over-year. Savannah had a record year, with container volume growth of 10.2 percent from 2013. December, which is usually a slow month for U.S. ports, was one of the busiest months on record in Savannah. Container volume spiked 18 percent year-over-year. Houston’s container volume increased 4.5 percent in 2014 compared to the previous year.
Los Angeles-Long Beach was the only West Coast gateway to experience growth in 2014, with total container volume up 2 percent over 2013. Container volumes declined 1 percent in Oakland, 13 percent in Portland and 6 percent in Seattle-Tacoma.
The Southern California port complex is gaining market share on the West Coast because carriers deploy the largest vessels in their North American services to Southern California. Carriers price their services aggressively to fill the vessels with capacities ranging up to 14,000 20-foot container units. Also, the western railroads offer more weekly services and price their intermodal services from Los Angeles-Long Beach more aggressively to promote density.
Oakland, which services the bountiful agricultural sector of California’s Central Valley, handles more exports than imports. However, U.S. exports as a whole struggled this year because of weak economic growth in China, Japan and the European Union. Seattle-Tacoma has lost market share in recent years because of growing competition from Port Metro Vancouver and Prince Rupert, British Columbia. Although the Pacific Northwest ports are capable of accommodating very large container ships, carriers deploy less capacity to the region than to Southern California because the local population base is smaller.
Portland has struggled the past two years because of a bitter dispute between the ILWU and ICTSI, which operates the port’s only container terminal. ICTSI said that container moves per crane, per hour, dropped from 24.8 in May 2012, to the low teens, and has stayed in that range for more than two years. Productivity averaged 13.2 moves per hour in the final quarter of 2014. Portland experienced 36 ILWU work stoppages or slowdowns during the 2014 holiday season, ICTSI stated.
West Coast ports have experienced congestion since last summer, but the congestion has grown increasingly worse because of dockworker slowdowns that began in late October, according to the PMA. The ILWU has been working without a contract since its previous contract expired on July 1, 2014. Coastwide negotiations in San Francisco have been held under the auspices of a federal mediator since Jan. 6. A client email sent on Jan. 29 by Apex Logistics International (JFK) Inc. said, “There is little hope for any short-term relief and we expect congestion and delays to worsen as labor contract negotiations are not resolved and continue to affect productivity against the surge in volume associated with Chinese New Year.”