Container cargo market share continues to migrate north of the 49th parallel and south of Donald Trump’s proposed U.S.-Mexico wall.
That’s one of the key findings in the U.S. Federal Maritime Commission’s (FMC) latest update to its Study of U.S. Inland Containerized Cargo Moving through Canadian and Mexican Seaports.
Atop the list of reasons for that migration: West Coast port congestion and the lingering effects of work stoppages and cargo-handling interruptions at American ports during the protracted mid-2014 through early 2015 contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association.
In his letter accompanying the update, FMC Commissioner
Richard Lidinsky emphasized that 2015 was “a pivotal year for U.S. cargo diversion into Canada and Mexico.”
The FMC noted, for example, that while North America’s container trade grew by a tepid 1.6% in 2015 compared with 2014, year-over-year growth at Mexican and Canadian ports was 5.1% and 4.1%, respectively. Growth at U.S. ports was 0.8%.
American ports continue to handle the lion’s share of the continent’s container cargo, but that share also slipped in 2015 to 78.5% from 79.1% in 2014 while Canada’s share increased to 12% from 11.7% and Mexico increased its share to 9.5% from 9.2%.
The estimated annual value of cargo that moves through California’s Port of Long Beach alone is approximately US$180 billion. It handles about 6.8 million containers per year. An estimated 43% of inbound U.S. container traffic flows through the ports of Long Beach and Los Angeles.
The FMC update pointed to several factors exacerbating U.S. port congestion. They include continued shortages of truck chassis, the arrival of mega-container ships that can carry 18,000-plus containers and new ocean carrier alliances being formed to maximize economies of scale and vessel efficiencies on global shipping routes.
B.C.’s ports were identified in the FMC report as major competitors to their American counterparts.
It noted, for example, that the Port of Prince Rupert is an increasingly attractive alternative for shipping companies because it has good shipping channel depth, provides the shortest trade route between North America and Asia (36 hours closer to Shanghai than Vancouver and more than 68 hours closer than Los Angeles) and has an efficient rail service to Chicago and the rest of the American heartland.
Prince Rupert, North America’s fastest growing port in 2014, was also ranked in the top 10 in the Americas category of the Journal of Commerce’s (JoC) 2015 global port productivity survey.
Its 2014 container cargo volume increased 15% over 2013; its 2015 container cargo volume jumped another 26% over 2014’s.
DP World, the Dubai-based company that owns Prince Rupert’s Fairview and Vancouver’s Centerm container terminals, announced plans in December to study further expansion of Fairview to increase its annual container handling capacity to more than two million TEU (20-foot containers).
Last March, Fairview’s operator committed $200 million to increase the terminal’s capacity 60%.
The FMC update also noted that the number of container shipping lines offering service to Prince Rupert has increased to 10 from one when it opened for container service in 2007.
Meanwhile, the Port of Vancouver, North America’s fifth-largest container port, posted a 5% increase in container cargo in 2015 compared with 2014.
Among its attractions to container lines, aside from a low Canadian dollar that reduces shipping costs, is the wealth of wood products and other cargo available to fill containers that might otherwise remain empty on their return trip to Asia.
But the port faces an increasingly acute shortage of the industrial port land needed to service any major container shipping expansion.
In a BIV interview earlier this year, the port’s president and CEO Robin Silvester expressed frustration over the reluctance of the region’s municipalities to discuss ways to address the looming shortage of port industrial land.
That conversation, he said, “isn’t happening. … We have seen a steady loss of industrial land [through] rezoning by municipalities [and] municipalities aren’t seeing a need to step up and protect industrial land, [and] that’s a problem.”
Expansion of container-handling facilities is critical to the port’s ability to maintain and expand its container cargo market share.
GCT Canada, which operates the port’s Vanterm and Deltaport container terminals, started a $280 million project last November to expand its Deltaport intermodal yard to increase its annual capacity to 1.9 million TEU.
The GCT Global Container Terminals Inc. subsidiary also announced in January that it had ordered 12 state-of-the art gantry cranes from Finnish manufacturer Konecranes (HEL:KCR1V) to increase container-handling efficiency at Deltaport, which was one of three North American terminals with the most improved port productivity from 2014 to 2015, according to JoC.
In June, the federal government announced an independent three-member panel to conduct an environmental assessment of the Vancouver Fraser Port Authority’s proposed Roberts Bank Terminal 2 project.
The review is expected to take approximately 14 months.
The three-berth container terminal at Delta’s Roberts Bank, in planning stages since 2012, would provide the port with an additional 2.4 million TEU of container handling capacity.
U.S. West Coast ports, meanwhile, are investing heavily in infrastructure upgrades to recapture lost container trade. The Los Angeles-Long Beach port complex is in the midst of a US$7 billion, 10-year terminal infrastructure and technology rebuild.
The FMC also noted that in April the Seattle-Tacoma Northwest Seaport Alliance approved US$141 million for terminal upgrades. However, the global container shipping business, hard hit by overcapacity and stalled economies in Asia and elsewhere, is in a serious slump.
Earlier this year, U.K.-based shipping consultancy Drewry cut its projected growth in global container traffic for 2016 to 3.3% from 4.9%. That downgrade followed a cut in its 2015 growth forecast to 2.2% from 4.5%.
But Cliff Stewart, the Port of Vancouver’s vice-president of infrastructure, said projected average annual container cargo-handling growth for the Vancouver and Prince Rupert ports is still 4%.
The Port of Vancouver handles approximately 2.8 million TEU per year; Prince Rupert processed 776,412 in 2015.
Annual container traffic on Canada’s west coast is forecast to grow to six million TEU by 2025.
