NORTH AMERICAN CONTAINERPORT OPERATIONS
COVID-19 BOOSTER Boosted by COVID-19, the structure of Asia-North America container trade is changing with increased use of US Gulf and East Coast gateways a fast emerging trend. Andrew Penfold summarises
8 The main arterial trade routes serving North America. Congestion on the West Coast is seeing increased interest in alternate port gateways to access the main US markets
The supply chain disruptions noted since mid-2020 have had far-reaching implications for the Asia to North America container trades. Shipping lines have sought (and found) alternatives to the major West Coast terminals with underlying comparative costs favouring long under-utilised alternatives. Were these trends already underway before Covid and has the pandemic just accelerated latent trends? The dominant China to San Pedro (Los Angeles/Long Beach) route has been the major driver of overall demand since it began to explode in the mid-1990s and double stack intermodalism became the primary feature of the business. However, several trends have been modifying the position since the mid-2010s, these include: 9 Increased competition from Canadian ports with strong intermodal links to the Midwest. Both Vancouver and Prince Rupert have seen volumes increase, with this supported by strong investment in capacity and extended intermodal reach. The shorter ocean hauls from China have also been a major factor here. 9 The development of the Panama Canal was a major catalyst. With much larger units – of up to 15,000TEU – transiting the Canal, the all-water route was already seeing increased demand prior to current congestion problems. The improvement of US East Coast ports has further catalysed these developments. 9 At the macro- level, major importers have sought alternatives to reliance on China. As Chinese production costs have increased there has been a shift to cheaper suppliers in south-east Asia. This trend was already inplace before Covid but is accelerating now for both economic and political reasons. The focus on this region makes the transport costs via Suez competitive on some North American East Coast trades. Looking ahead, what does this mean for port development?
24 | JANUARY/FEBRUARY 2022
WHAT HAS HAPPENED? The congestion in San Pedro has seen very long berthing delays throughout 2021 and this is continuing. With upwards of 100 vessels awaiting handling, this has effectively reduced the supply side of the container shipping equation and seen freight rates climb to unprecedented levels. The genesis of this situation is complex and results from labour difficulties, supply chain uncertainties and other short-term disruptions. Although the lines have been delighted by the impact of this on their profits the long-term impact is problematic. For some containerised goods the freight rate is now making economic production in China uncompetitive – this was seen as highly unlikely pre-Covid. More onshoring will be the result but (more importantly) new alternatives are being sought.
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