While many eyes are on trade talks between our country and China, America’s port leaders are positioning their seaports to compete for increasing volumes of container traffic.
After container shipments surged in November, primarily from pre-tariff contracts — they plunged by year end, impact of U.S. and China trade war.
Outbound container volume at the neighboring ports of Los Angeles and Long Beach fell 11.8 percent in November from the same month in 2017. It was a decline after seven straight months of export growth.
But looking ahead, the stiff competition between east and west coast ports for container shipments is ramping up. The new Panama Canal, which opened in 2016, has been the catalyst for that growth.
Ships carrying up to 14,800 containers can now navigate the canal bypassing Washington ports. Shippers now have a cost-effective alternative to reach midwestern markets from southern and eastern states.
The older canal could accommodate ships with 5,000 containers, but it was a bottleneck causing up to 30-hour delays just to get a time to enter the canal. No more!
After the new canal opened, there was an increase of 23 percent in tonnage over the first 16 months. Now, Boss Magazine estimates seaports from New York to Georgia handle nearly a quarter of the container traffic and building for more.
An “arms race” is underway as ports try to make room for the larger ships, Robert McNab, an economics professor at Old Dominion University in Norfolk, told the Associated Press.
Eastern seaports are making significant investments to attract container business. Projects include dredging deeper channels in Georgia and South Carolina. Part of a bridge was elevated to allow bigger ships to reach New York City-area ports.
The Georgia Ports Authority, which owns and operates the Port of Savannah, is spending $1.5 billion over the next decade to install taller cranes, add storage capacity and invest in a cutting-edge computer system that connects trucks with containers much quicker.
Georgia is spending another $120 million on road improvements near the port to move containers more rapidly to highways and railroads — something Washington desperately needs to do.
The Virginia Port Authority started positioning the world’s largest cranes to handle containers from the larger ships. The new gantries stand 170 ft. tall. Virginia is spending $350 million to dredge its shipping channel from 50 to 55 ft.
Big container ships are coming to Washington ports as well. They are behemoths. Stand one upright and it is taller than the Empire State Building.
There are opportunities for Washington. The ports of Seattle and Tacoma formed an alliance to lure the new 20,000 container ships which are too large for the new canal. They are deep water ports and can accommodate ships requiring more than 50-ft. drafts but the roadways leading to the ports are heavily congested.
Competing requires more than deep water. All port must be capable of streamlining container handling dockside which can lead to costly labor disputes.
There is a lot at stake.
According to a College of William & Mary recent economic study, 343,000 Virginia jobs – nearly 10 percent of the state’s workforce – are linked to port activity across the six seaport terminals. Those jobs generate $13.5 billion in annual compensation and $1.2 billion in state and local taxes.
Exports from Washington helped contribute to the $2.33 trillion of U.S. goods and services exports in 2017, according to the U.S. Dept. of Commerce. At last count, port activities generate 194,000 jobs in our state.
Keeping Washington competitive for container shipment requires added attention. Costs and efficiencies will drive new investments.
Don C. Brunell is a business analyst, writer and columnist. He recently retired as president of the Association of Washington Business, the state’s oldest and largest business organization, and now lives in Vancouver. He can be contacted at theBrunells@msn.com.