With the spectre of a strike behind them, container gateways on the US West Coast are investing to beef up their capabilities and draw in business.

In late July, the Port of Oakland kicked off the installation of its Freight Intelligent Transportation Systems (FITS), a set of 15 advanced technologies to manage truck arrivals and goods movements more efficiently, reduce vehicle wait times and emissions, and improve safety and incident response.

In a separate move, the port is working to improve road and rail access, which includes the reconstruction of a 90-year-old underpass that serves as the primary gateway for 40% of the trucks entering the port.

FITS is expected to be fully live this fall, when work on the underpass is scheduled to begin.

The Port of Long Beach has designated US$250 million of its fiscal 2024 budget for ongoing capital improvement programs, which begins on October 1. Over the next 10 years the port intends to spend more than US$2.2 billion on infrastructure projects.

“As we continue to weather challenges in the trade industry, the Port of Long Beach is looking toward the future by investing in projects that will enhance marine terminal productivity, deliver greater efficiency to our customers and improve the sustainability of our operations,” said Mario Cordero, the port’s executive director. “This budget demonstrates our ongoing financial strength and our position as a leading gateway for trans-Pacific trade.”

Cordero and his counterparts at the ports in Oakland and Los Angeles are eager to regain lost ground.

The congestion that trapped cargo at the West Coast ports in late 2021 and last year, followed by uncertainty over a potential strike in the contract negotiations between maritime employers and West Coast port labour, prompted many cargo owners to divert traffic to ports on the US East and Gulf Coasts, which took a heavy toll on throughput at the California ports.

According to Gene Seroka, executive director of the Port of Los Angeles, about 15% of the gateway’s cargo left during the labour contract negotiations, starting in August of 2022.

“History has shown that some of it will stick to those East and Gulf Coast ports. Our job now is to be absolutely relentless and going after every pound of freight possible,” he said.

Some traffic returned already before the conclusion of the labour negotiations. Despite sluggish imports, in June the port’s container volume was up from February, which marked the low point of container flow through Los Angeles.

Nevertheless, container throughput in the first half was down 24% year on year to 4.1 million TEU.

Oakland’s box count was 26.5% lower in June than a year earlier, as imports slumped 30.6% and exports fell 20.8%.

“Although cargo has begun to return to the West Coast, weak consumer demand and high inventory levels continue to be headwinds to volume recovery,” said Bryan Brandes, the port’s maritime director in Oakland.

“However, operational improvements, the return to normalcy, and the settlement of labour contracts create an opportunity for us to gain a greater market share of containerized cargo.”

In their quest to regain traffic, the California gateways have support from the state government. Long Beach is getting US$383 million, while Los Angeles has been granted US$233 million and Oakland US$119 million from the California State Transportation Agency to improve the movement of goods.

Observers have commented that not all the cargo that was lost to gateways elsewhere in the U.S. will return to the West Coast. The shift began well before the problems with congestion and the labour talks, and some cargo owners have invested in warehouses and other infrastructure at their new gateways.

Agriculture shippers have indicated a desire to diversify to reduce their reliance on West Coast ports. Beef exports through the West Coast dropped 14% last year, while they rose 6% and 62%, respectively at the East and Gulf Coast ports.

On the other hand, the West Coast gateways offer the fastest and cheapest route for imports from Asia, which is hard to ignore under the cost pressure that companies are struggling with today.

Lately, there have been new question marks over the route from Asia via the Panama Canal, as severe drought conditions have forced the canal authority to impose draught restrictions and limit the number of vessel passages per week.

As the canal uses fresh water, there is concern about increased salinity in the lakes and rivers in the canal’s watershed, which supply the capital and two other cities in Panama. It takes around 50 million gallons of fresh water to move a ship through one of the canal’s locks.

According to the canal authority, the restrictions are likely going to remain in place for a long time.

The Port of Long Beach is not banking exclusively on its trans-Pacific freight volumes. Earlier this year, Cordero revealed plans to create a 400-acre wind turbine manufacturing facility on newly built land, which would be the largest facility in the U.S. for the manufacture and assembly of offshore wind turbines.

After assembly, the wind towers would be towed out to wind farms about 30 km off the coast of California.

‘Pier Wind’, as the project is called, would involve a terminal with heavy-lift wharves and cranes and ample laydown space for wind energy components.

“Cargo volume is not the sole metric of success for the Port of Long Beach,” said Cordero. “Rather, how we serve our customers, contribute to our local community, mitigate the impacts to our neighbourhoods, and serve our labour force, these are important metrics for the Port of Long Beach.”

By Ian Putzger

Correspondent | Toronto