Since January, US companies have been holding their breath awaiting what will happen with trade negotiations between the United States and China. While the US trade deficit with China was a staggering US$419.2 billion in 2018, Americans like cheap, Chinese-made goods. According to US Census, US exports to China total over US$120.3 billion, while imports from China are worth more than US$539.5 billion.
In a rush to beat any additional increases in tariffs, large quantities of China-made goods have been offloaded at US seaports which, consequentially, have been experiencing record volumes. The Port of Los Angeles reported record cargo volumes of 9,458,749 TEUs last year. Last year for the first time ever, the Port of Long Beach (POLB) surpassed 8 million TEUs as cargo grew more than 7%. The Port of New York and New Jersey also set new records, with cargo volumes up 7% in 2018, surpassing the 7 million TEU mark for first time in its history, helping maintain its position as busiest port on the US East Coast. In January, the Port of Savannah achieved the busiest month ever in its history, moving 433,975 TEUs, a 28% jump over the previous year.
Cargo volumes this year, however, are slowing down.
“Cargo owners have brought significant amounts of cargo into the US ahead of [increased] tariffs [with China],” said Phillip Sanfield, Port of Los Angeles spokesman. “Some goods were shipped in the last quarter of 2018.”
At 348,316 TEUs, the Port of Los Angeles reported a 9.08% decrease in imports in February 2019 over February 2018. Exports in February 2019 were 142,555 TEUs, down 9.54% from February 2018.
“With an uneven trade flow, we will be closely evaluating next steps for enhancing supply chain efficiencies,” said Port of Los Angeles executive director Gene Seroka.
In February 2019, POLB handled 302,865 TEUs inbound, down 11.5% from the same period in 2018, and 105,287 TEUs outbound, down 19.6% from February 2018.
At 69,977 TEUs, February import cargo decreased 5% year-over-year at the Port of Oakland. It was the first decline in import volume since July 2018. February exports, at 67,837 TEUs, were down 8.2%. The shipment of empty containers back to origin destinations increased nearly 7%.
Port officials attributed decreased volume mostly to a pause by shippers following a 2018 global trade frenzy. Shipments spiked last year as importers rushed cargo to the US ahead of anticipated tariff increases. Analysts have since predicted an import slowdown due to jammed warehouses and delays in tariff hikes.
The number of empty containers returned to origin destinations from these West Coast seaports emphasize the trade imbalance. The Port of Los Angeles handled 214,436 empty containers in February 2019, up 16.3% over February 2018. POLB, on the other hand, saw only a 0.1% decrease in empties handled (188,465 TEUS) in February 2019 over February 2018 figures.
Uneven trade flows are causing problems for shippers at both West Coast ports where shippers are criticizing terminal appointment systems for clogging up truck turns and poor chassis management. The problem at the Port of Los Angeles centers on the fact over half of empty and export containers brought back to the port go to different terminals rather than their terminal of origin. This has resulted in thousands of chassis being repositioned around the port daily.
Compounding the log jam is the arrival of mega ships such as the MSC Eloane with its capacity of 19,500 TEUs, which called at terminals at both ports in mid-March. Its rotation is usually Asia-to-Northern Europe. It arrived in Southern California mostly to pick up empty containers.
In the meantime, the Ports of Los Angeles and Long Beach are investing in infrastructure and technology that, executives say, should help fix these problems.
The Port of Los Angeles is investing in a US$34 million on-dock rail yard expansion that will expand an existing intermodal rail storage yard on Terminal Island. More than 31,000 linear feet of track will be added to expand the number of storage tracks from six to 11. The project will increase capacity and use of the Pier 400 on-dock railyard by up to 525,000 TEUs annually, which represents about a 10% overall increase in capacity for the port. As a result, capacity will be freed up at another major storage and staging yard on Terminal Island, thereby improving overall rail operations throughout both seaports.
At POLB, finishing touches are underway on the replacement for the Gerald Desmond Bridge, which handles about 15% of all containerized imports into the US. The final phase of construction on the new Long Beach Container Terminal (LBCT) is expected to be complete in 2021. This includes the last 1,000 feet of the 4,200-foot-long highline or wharf, completion of the rail yard, and erection of the new terminal administration building. The 10-year, US$1.49 billion modernization project adds on-dock rail capacity, shore power hook-ups and the 4,200-foot-long wharf. At full build-out, the new terminal will be able to move twice the cargo with less than half the air pollution of the two terminals it replaces. Port officials say it is already the greenest, most technologically advanced terminal in the US.
Meanwhile, with larger ships calling on US East Coast ports, thanks to the expanded Panama Canal, port improvements there are underway.
The Georgia Ports Authority recently unveiled its Big Berth/Big Ship programme that will allow the Port of Savannah to simultaneously handle six 14,000 TEU vessels by 2024.
“No other single container terminal in North America has the ability to expand berth capacity at this rate,” said GPA executive director Griff Lynch.
Currently, Savannah’s Garden City Terminal is equipped to handle two of these vessels and by April of this year that number will increase to three.
GPA Board Chairman Jimmy Allgood said: “GPA’s Big Berth/Big Ship programme will ensure Georgia stays ahead of demand and ahead of the competition.” Over the next five years, GPA plans to add another 21 Neo-Panamax ship-to-shore cranes, replacing 14 of its older models to bring the total fleet to 37. Dock upgrades are already under way to support the new, larger machines.
A game changer for the Port of New York/New Jersey was the US$1.6 billion raising of the Bayonne Bridge, which, completed in 2017, raised the clearance under the bridge to 215 feet. This allows 18,000 TEU ships to pass underneath it.
Other important improvements include the Port Authority of New York and New Jersey’s newest rail facility, ExpressRail Port Jersey, which opened at the end of last year. It expands the port’s capacity to 1.5 million container lifts a year and links the GCT Bayonne terminal to CSX and Norfolk Southern’s rail network to reach key inland markets.
The intermodal yard, which is designed to complement the terminal’s capabilities, will have an annual capacity of 430,000 TEUs and 250,000 container lifts. The new facility completes the port authority’s US$600 million project to establish direct access to on-dock and near-dock rail service for its major marine terminals.
By Karen E. Thuermer
Correspondent | Washington