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US ports sector and the longshoreman’s lament

US ports sector and the longshoreman’s lament
For a true global economic titan, the failure of the US ports sector to match the pace of development elsewhere has long remained a vexing issue.

A new report published by Drewry Shipping Consultants has found that the “perfect storm” affecting the US west coast ports is the result, in addition to a number of temporary factors, of a deep-seated failure to employ infrastructure assets efficiently in comparison with the rest of the world.

West coast terminals are so congested that cargo forwarders have written to President Obama warning that “a full shutdown of every west coast port may be imminent,” raising the spectre of invocation of the Taft-Hartley Act, last used to force labour back to work by President Bush in 2002.

“The situation has now deteriorated to the point of mud-slinging between the employers (PMA) and the union (ILWU). Major carriers have had enough and are imposing congestion surcharges of up to $1,000 per teu for cargo moving through US west coast ports,” said Neil Davidson, senior analyst in Drewry’s Ports and Terminals practice.

A recent study commissioned by the National Association of Manufacturers and the National Retail Federation estimated the potential cost to the US economy of a west coast port shutdown has more than doubled since 2002 to as much as $2.5bn per day if it were to last 20 days, Drewry said.

Drewry’s new report, ‘Container Terminal Capacity and Performance Benchmarks,’ compares capacity and performance data for 500 terminals worldwide.

US ports have long lagged counterparts in areas like Asia and the Middle East in intensity of use of three key container-terminal assets–-the quay line, gantry cranes and terminal land area.

Drewry’s data, summarised in Table 1, show that the US lags the global ports industry by sizable margins in key areas. In particular, US yard performance, measured by teu per hectare per year, is less than half the global average, and only a quarter of the world’s best-performing player.

Table 1: Global Port Metrics 2013 *

   

World

 

US

Average

Best

Teu per Metre of Quay

73%

100%

136%

Teu per Gantry Crane

80%

100%

113%

Teu per Hectare

44%

100%

168%

All figures are per year, for 2013.
* Seatrade did not have access to the underlying data, and uses approximate percentages to reflect this.

Source: Drewry, Seatrade Global

“These analyses are deliberately distinct from typical service-level related measures such as crane moves per hour,” said Davidson. “Instead, they reflect the performance of the most important—and expensive—infrastructure and equipment assets in a modern container terminal.”

Not surprisingly, the report’s findings underline the fact that ports with a higher proportion of transhipment cargo perform better than those where gateway movements predominate.

“US terminals handle very little transhipment (a reflection of the relatively high handling costs in the US, themselves a consequence of high labour costs). In addition, the gateway traffic handled by US terminals is mainly imports, and import traffic tends to have longer dwell times in the yard than exports, and more complicated handling requirements,” said Davidson.

“It seems unlikely that US terminals will markedly change their traffic mix in the foreseeable future, so this factor has to be regarded as immovable.”

Average US terminal size, at 25% smaller than the world average, means that fragmentation of North American terminal capacity is another issue dogging US progress. US working hour practices also come in for criticism, and are a far cry from the uninterrupted 24-7 operations of many of the world’s better performers. Davidson suggests an increase in terminal automation could dramatically improve the situation in the US.

“North American, and in particular US container terminals, need to take steps to improve the intensity of infrastructure and equipment usage. This will require substantial investment and the cooperation of employers and the unions. The alternative is potentially huge macro-economic costs of further port congestion in future years,” Davidson concluded.

 

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