LA-LB ports fight to retain market share by enhancing efficiency
FACED with mounting pressure from declining US exports to China, coupled with slowing import growth and congestion-relation performance issues, the port of Los Angeles and Long Beach are doubling down on efficiency enhancements to stem the loss of discretionary cargo to other regions of North America
20 October 2019 - 19:00
The Southern California gateway is moving towards adopting new strategies, which include enhanced sharing of shipment data with stakeholders through port portals. In addition, there are intermodal improvements designed to increase on-dock rail, and a continued investment of billions of dollars in infrastructure to expand what is already the largest network of container terminals, on-dock intermodal rail facilities, and roadway access in the US.
Executive director of the Port of Los Angeles, Gene Seroka, said Los Angeles and Long Beach must accelerate cargo velocity in order to compensate for the higher costs involved in shipping cargo through the ports. 'I continue to believe we can command a premium,' Mr Seroka told the Harbour Association of Industry and Commerce recently.
With the second-largest consuming population in the US; more than 1.5 billion square feet of warehouse, distribution, and industrial space; 12 container terminals; and unmatched intermodal rail services to the eastern half of the country, no other gateway can match the advantages of Los Angeles-Long Beach when the ports are operating efficiently, Mr Seroka said.
The port complex last year handled a record 17.5 million laden and empty TEU, according to the ports' statistics. Number two New York-New Jersey last year handled 7.2 million laden and empty TEU. However, Los Angeles-Long Beach has experienced a 22 per cent loss of US market share since 2002, Mr Seroka said.
Over the past 17 years, ports on the East and Gulf coasts significantly expanded their terminal, rail, and roadway infrastructure as they prepared for the expansion of the Panama Canal in 2016.
The canal authority recently offered incentives through a loyalty programme to attract more cargo on the Asia-East Coast route, and carriers the past two years more than doubled the size of vessels transiting the canal, from the previous 5,000-TEU limit to more than 10,000-TEU capacity.
At the same time, Canada's Pacific Northwest ports of Vancouver and Prince Rupert, which have direct intermodal rail service to Chicago, have captured a growing share of the US market.
As an indication of the lower cost of shipping through Canada, a study last year by the Northwest Seaport Alliance of Seattle and Tacoma determined that due largely to much lower intermodal rail rates charged by the Canadian railroads, an importer in Chicago saves US$400 to $600 per container shipping through Vancouver compared with US West Coast ports.
The latest blow to the competitiveness of the Southern California gateway has been the Trump administration's year-long trade war with China. 'This administration's ill-advised and damaging policies are causing irreparable harm to trade,' Mr Seroka said. The harm is certainly occurring in the short term, but will last for years, with some markets likely to be permanently damaged, he said.
Longer-term repercussions from the Trump administration's trade policies bode ill for US West Coast ports because of geographical shifts in import and export markets away from China and the huge market it represents. The loss of export markets for US farm products, scrap recyclables, and machinery will be devastating, according to Seroka. 'You can't make up for China,' he said, according to IHS Media.
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