US WEST Coast ports, including the Port of Oakland, could be entering a highly turbulent period in the future with the projected slowdown of global trade and with changing manufacturing technologies and increased competition.
These ports have enjoyed decades of success serving as the point of entry for billions of dollars-worth of goods, mostly from China and East Asia. Imports from Asia to the United States generated 9 million American jobs, 4 million in California, Oregon and Washington in 2014, according to the Pacific Maritime Association.
But if there is a significant diversion of containers from West Coast ports, the reduced volume will place job development programmes, such as those envisioned in Oakland and the tax dollars funding them, at risk. If Oakland and other West Coast ports cannot accommodate new large ships, they may have to limit their business to local markets, the San Francisco Chronicle reported.
Economists widely accept that China's economy will slow from double digit to single digit growth. China's economy is expected to shift toward more domestic consumption, which would result in substantial reductions in China's exports to the United States.
Changing technologies, including 3D printing, could further reduce East Asian exports. If goods can be produced at the point of use, rather than imported from Asia, flows of goods will slow.
Moreover, Chinese businesses are investing in manufacturing thread near US cotton fields in Southern states (a trend referred to as "reshoring" of manufacturing to advanced economies). This may shorten supply chains to American customers but also could provide increased exports from the United States to East Asia.
An allwater route for larger ships from Asia to the East and Gulf coasts ports will intensify competition for business.
The Panama Canal Authority is set to open the enlarged canal in April 2016 or soon thereafter. This will provide shippers from East Asia an allwater route for bigger ships to the Atlantic Ocean. From there, ships can travel north to serve East Coast ports and west to serve the Gulf Coast ports.
This would bypass the West Coast ports, where goods shipped from Asia are loaded on railcars and carried to US destinations by rail. An allwater route would add three to five days of travel time but at significantly lower cost.
Not all trends, however, favour the modernised Panama Canal. Ocean carriers are on a buying binge for ships 50 per cent larger than those that even the widened canal can accommodate. Cosco and China shipping, the two largest Chinese ocean carriers, just merged and ordered 11 of these ships (known as Triple Es) to compete more effectively for global container trade. Evergreen, a Taiwanese shipper, also ordered 11 of these ships.
Ports of Virginia, Baltimore, Charleston, S.C., and Miami now have 50-foot channels, and New York/New Jersey is close to completing its enlargement project. Within a few years, they will all be able to unload the biggest ships. The Triple E ships likely also will ply the East Asia to Los Angeles route across the Pacific when the ports of Los Angeles and Long Beach can accommodate them.
These bigger ships will challenge both the West Coast ports and the Panama Canal Authority to be more adaptive. West Coast ports that are agile and innovative by anticipating and adapting to the future will succeed in this environment. Those that are slow to respond will fail with millions of jobs hang in the balance.
WORLD SHIPPING
29 October 2015 - 21:40
Worrying future for US west coast ports
US WEST Coast ports, including the Port of Oakland, could be entering a highly turbulent period in the future with the projected slowdown of global trade and with changing manufacturing technologies and increased competition.
WORLD SHIPPING
29 October 2015 - 21:40
Worrying future for US west coast ports
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