In the next three years Hyundai Heavy Industries will deliver 145 new container ships, an amount equivalent to 55% of the number of vessels Hyundai built in the past three decades. According to BRS-Alphaliner, a global shipping intelligence unit, the world-wide fleet of container ships increased at a rate of 9.8 percent in 2004, but the expected rate of growth will be at an even higher 14% annually until 2008. And of course, the ships are getting bigger and bigger.
How can this increase in vessel numbers and sizes possibly benefit the ports in Southern California in the coming years though? The authorities can boast all they want about the smooth sailing during this year’s peak season, but the limited congestion in LA-Long Beach was not brought about by the PierPASS initiative or the hiring of longshore workers. The truth of the matter is that, through October 31st of this year, 2383 container ships called at the ports of LA-Long Beach, and that number was 177 fewer than the ports saw during the same period in 2004.
Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia, noted the 29.6 % TEU increase in September at the Port of Savannah, and stated that, “A lot of shippers are moving cargo through East Coast ports instead of West Coast ports”. This shift is being fueled by increased shipments from Asia, he said, and he added that although the LA-Long Beach ports are closer, shipping lines are electing to take an all-water route to eastern population centers because of congestion at those two ports. Mr. Humphreys also expressed concern about problems being encountered with cargo being shipped by rail from those Southern California ports, a concern expressed not long ago by Mr. Albert Pierce of the Transpacific Stabilization Agreement. Mr. Pierce noted that inadequate numbers of locomotives and railcars at the ports’ Intermodal Container Transfer Facility were the cause of these delays, and that waiting times, he said, are anywhere from four to six days at this bottleneck.
Evergreen, Maersk Sealand, Yang Ming and MOL were forced to divert ships to Oakland during last year’s peak season congestion at LA-Long Beach, and to no one’s surprise, those lines have made these Oakland routes permanent, as evidenced by the fact that the port saw an increase in imported cargo of over 25% through September of this year. Five years ago Mr. Doug Tilden, Chief Executive of MYC Terminals, was telling us that the Port of Oakland had committed to spend $ 1 billion to build terminals of 120 to 150 acres and expand its rail and infrastructure, and that the port “is betting the lines will hit a brick wall in Southern California.” Nowadays Mr. Tilden can be heard saying, “They are doing all the right things to maximize their situation. While the other ports have been navel-gazing for two years, the Port of Oakland has developed its relationships.” Even now Oakland’s officials are indicating their willingness to develop the inland port in Sacramento.
If shipping lines are being forced to divert vessels from congested LA-Long Beach to other more desirable ports up and down the west coast of North America, and if Oakland is already cashing in on these diversions, why don’t officials in California have the good sense to develop container-handling facilities in the state’s other under-utilized, or shut down, ports?