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Southeast ports boom would bode ill for some exporters

By Richard Knee

Southeastern U.S. ports stand to gain big-time from a southward migration of Asia’s manufacturing activity, which would strain container supplies for American exporters tied inextricably to West Coast gateways.

That message surfaced at an agricultural product shippers’ conference that took place in San Francisco in late June.

Traffic growth at Savannah and other southeastern ports such as Charleston, Jacksonville, Miami, Norfolk and Baltimore promises to accelerate because imports from Vietnam, India and Bangladesh – where many manufacturers have set up shop as labor and real estate costs in China have soared – typically move through the Suez Canal and across the Mediterranean and the Atlantic, according to a number of speakers at the annual gathering of the Agriculture Transportation Coalition, an advocacy organization based in Washington, D.C.

The Southeast also offers a "business-friendly" environment that shippers and their service providers find attractive, speakers said.

The southward flight of Asian manufacturing and thus of sourcing would cause shipping lines to shift vessels from West Coast to East Coast ports, which would make it difficult for shippers captive to the former to find containers, said Thorsten Meincke, senior vice president of global sea freight for Kuehne+Nagel, which offers transportation-related services such as freight forwarding, customs brokerage and logistics.

Increasingly, cargoes arriving in port are transloaded into 53-foot containers or trailers for overland movement so emptied ocean containers can be quickly repositioned to carry more goods to the U.S., said Meincke, whose company is globally active and based in Schindellegi, Switzerland.

The manufacturing and sourcing shifts are not the only factor driving traffic growth on the U.S. East Coast. Atlantic ports, most notably Savannah, have seen their volumes shoot up over the past 13 years, especially with episodes of congestion and labor-management tension out West prompting importers of Asian goods to shift some cargoes from the traditional ocean-land route via California, Oregon and Washington state to all-water movements through the Panama Canal.

Savannah has shot past Oakland and Seattle during that span to trail only Los Angeles, Long Beach and

New York/New Jersey in container volumes among U.S. ports.

West Coast port officials, terminal operator executives and union leaders told the AgTC gathering that they know they must do better at serving their customers. Port executive directors Jon Slangerup of Long Beach, Gene Seroka of Los Angeles and Chris Lytle of Oakland vowed a more hands-on approach notwithstanding the landlord role (rather than operating status) of their respective port authorities.

One thing that shippers will watch closely is whether terminal operators and dockworkers on the West Coast will begin contract negotiations earlier than usual as their counterparts on the East and Gulf coasts are doing.

The current contract between the United States Maritime Alliance and the International Longshoremen’s Association, affecting dockworkers at Atlantic and Gulf ports, won’t expire until 2018—but they are reportedly talking about extending the pact through 2025.

The West Coast contract between the Pacific Maritime Association and the International Longshore and Warehouse Union will expire in 2019. Asked if the union would consider a similarly early start to talks toward the next contract, mainland vice president Ray Familathe at first said, "Absolutely," but later took a different stance, saying negotiations toward the next pact are four years away.

That didn’t seem to please shippers at the gathering but some of them, including AgTC executive director Peter A. Friedmann, noted that the ILWU deserved credit for sending high-level representatives to the conference while the PMA sent no one.

The two-day event drew about 450 participants, some 250 of them representing shippers with annual aggregate volume of 2 million TEUs of containerized cargoes plus untold millions of TEUs’ worth of products moving on bulk vessels, Friedmann said.