Enough Is Enough

1. As Peter Keller just advised us, we have “… too many eggs in one basket … we need to spread the risk … we need to look for other places to accommodate growth”.

2. Jean Godwin was one of the first to speak out about cramming and jamming within container terminals when she said, “It’s like trying to fit a 16-inch pipe into a 4-inch opening”.

3. Allen Clifford of Mediterranean Shipping said the same thing earlier this month when he compared port congestion with the futile attempt to park three cars into a two-car garage.

4. Nolan Gimpel of Axiom Consulting warned us several months ago that mega-ships are straining the capacity of inland infrastructure, terminal operators, and rail and truck carriers, and that the least costly way to expand these separate but linked operations is to establish smaller container ports closer to end users.

5. Neil Davidson of Drewry Shipping Consultants also emphasizes the need for smaller container handling ports closer to the end user.

6. Jerry Bridges at the Port of Oakland says, “ Too much cargo through too few ports, and diversifying the routings of import cargos will be the only way for our country to steer safely through these rocky shoals”.

7. “We must find a way to build more terminals on the West Coast”, said Tommy Stramer of Zim American Shipping. “There will be more all-water strings to the U.S., which will mean more pressure on East Coast ports. A way must also be found to build more terminals there.”

The maritime authorities cited above are now worrying about the unavailability of acreage for port expansion. Until recently this shortage of land seemed to be a remote possibility, but almost overnight port directors, terminal operators and transportation managers along the entire supply chain have come to feel the crushing impact of this scarcity. Those cited above say it in different ways, but the meaning in each case is quite clear. Enough is enough, and Secretary Norman Mineta made no bones about a few months ago when he reminded us that only 60 of the more than 360 ports in the U.S. handle containers at the present time, but that another 200 of these U.S. ports will be required to handle containers in the foreseeable future. From afar, he saw the developing logistic problems in the nation’s transportation infrastructure, and because the solution is so obvious and so simple, he put it on the table in an obvious and simple way. On October 13th, this website reminded the readers of Secretary Mineta’s advisory. Retrofitting other U.S. ports to handle containers would be like killing a half-dozen or more birds with one stone, and the sooner this tack is taken the sooner our entire transportation system will be streamlined. Some folks don’t quite get it, however. Even though a measure of relief was realized at LA/Long Beach when more than one hundred ships were diverted to other ports last fall, the full meaning of Secretary Mineta’s strategy has yet to register.

Acknowledging that transportation gridlock is imminent, West Coast authorities are now considering an inland container depot and a rail shuttle connecting the LA/Long Beach complex with that offsite depot. Think about that for a minute. It’s no secret that there are 29 ports on the West Coast. The media made that fact known to the whole country during the stoppage in 2002. Less than half these 29 ports are handling containers but they would dearly love to get in on the act. Peter Keller says, … “we need to spread the risk” … and spreading the risk by retrofitting these ports for container handling, and at so little cost, would greatly ease the congestion at the LA/Long Beach complex and would be highly advantageous to the West Coast economy.

But to consider building an inland container depot and a rail shuttle between the port and this offsite depot for the purpose of easing congestion? What are they thinking? It would take years just to get the project off the ground, and time is one of the commodities that is in short supply. It would also cost billions of dollars, and Mr. Zev Yaroslavsky, an LA County Supervisor, has already admitted that money is another commodity in short supply. While we’re on the subject of money, has anyone calculated what it will cost for the extra moves required in order to transport an offloaded container from dockside to the offsite depot? This sort of diversion is not what we had in mind when we wrote our “Run to daylight” commentary on November 1st, and our “Keep it simple, Sweetheart!” commentary on November 18th.

No, Secretary Mineta’s strategy has yet to register North of the Border, but the West Coast crunch has caused a stir South of the Border. Hutchison Whampoa, the world’s largest terminal operator, is committing millions to the development of at least three container terminals on Mexico’s West Coast, in the ports of Ensenada, Manzanillo and Lazaro Cardenas. We covered this announcement in our December 2nd commentary, during the height of the Christmas confusion at LA/Long Beach, and we ventured to say that Hutchison made this strong move in order to take advantage of that annual confusion. Officials at Hutchison downplayed the importance of their presence but a highly placed official in the Commission for Economic Development and Port Affairs announced that the new terminal in Ensenada will become “the primary port of the Asian Pacific”. Don’t doubt it for a moment. This statement came on the heels of an announcement that Chinese government officials and 23 officials from China’s business world had scheduled a visit in order to explore investment possibilities. The historical successes of Hutchison Whampoa’s management team have earned the company an enthusiastic following.

Wait. There’s more. Maher Terminals announced an agreement with the Prince Ruppert Port Authority in British Columbia to create a new intermodal container terminal on Canada’s West Coast, to be called the Prince Ruppert Container Terminal. Maher Terminals, although an East Coast-based operation, has noted the reluctance, or miscalculations, on the part of West Coast officials to expand into smaller ports, and has acted to fill the void. A second port, Fraser Port, on the Fraser River close by Vancouver, is also being developed as a container port.

Relief is in sight, as we indicated in our December 2nd commentary, but it won’t be in the best financial interests of California residents. Vessel diversions to Mexican and Canadian ports will ease congestion, you can be sure, but it will cost the U.S. West Coast a lot of money, a lot of jobs, and a great deal of prestige.