US east coast to take more west coast market share, says Atlanta banker
 THE east coast-west coast battle for Asian import market share rages on with both sides seeing omens of plenty for their coast and portents of incipient ruin for the other side of the coast.
It's largely an American battle though through the still tiny port of Prince Rupert the west coast wins a goodly number of import boxes. But Vancouver, Canada's biggest port, is out of the game from the start because more than 95 per cent of its import cargo is bound for Canadian destinations.
And while Mexico's Lazaras Cardenas was supposed to relief congestion at southern California ports when started with a tie-up with the Kansas City Southern Railway, using El Paso as a gateway, there was a general downturn of 2008 and no congestion to relieve.
About this time, Mexico's efforts to pull itself out of self-imposed economic doldrums began to bear fruit generating its own respectable consumer demand and making it worthwhile for the port of Lazaro Cardenes to service the domestic market.
The battle of the American coast had been with us for some time with the west coast sneering at all comers, until first Savannah and then Charleston made serious inroads.
And with two Democratic administrations back to back and two runs of Red State Republicans, money started to pour into the long neglected blue state Democrat country for dredging and highway upgrades that turn out the donkey vote up and down the east coast.
Some like Atlanta bank vice president Kiernan Conway, thinks the 50:50 east-west coast market share split of US containerised cargo will switch to 60:40 per cent in favour of the east coast.
Speaking at the annual South Carolina International Trade Conference last week, Mr Conway, of Atlanta's Sun Trust Bank, said the south eastern's region's thriving economy, the Panama Canal expansion and combined with Los Angeles and Long Beach congestion to bring about a fundamental change in coastal market shares.
"There will be a remaking of the North American supply chain from the west coast to the east coast," said Mr Conway.
But not everyone agreed. Some supply-chain experts said Mr Conway's theory was a case of over excitement based on current trade volumes.
East coast ports in August raised their market share of US imports to 42.54 per cent from 42.4 per cent in July, while west coast ports' share slid to 50.84 per cent from 51.02 per cent in July, according to PIERS data.
To achieve a fundamental reordering of cargo routing, US east coast ports will have to significantly increase their penetration of markets in the US interior, markets that are firmly in the west coast's hinterland owing to transit time advantages, established intermodal rail services and the density of volumes already committed to those routes.
To support his claim of continued gains for east coast ports, Mr Conway highlighted that gross domestic product of the southeast is expanding at twice the rate of the national economy. Also, the double-digit growth rates of most east coast ports in 2015 compared to 2014 are impressive.
Furthermore, west coast import market share has decreased from 56.8 per cent in 2000 to 49.5 per cent last year.
Los Angeles-Long Beach also suffers from congestion problems as a result of handling 15 million TEU annually and a slew of regular weekly calls with vessels ranging in size from 8,000 to 14,000 TEU.
Shippers and carriers who addressed the South Carolina conference said the larger Panama Canal, by itself, will not result in a significant shift of cargo from the west coast to the east coast.
Vice president of transportation at Lowe's, Rick Gabrielson, said the fundamentals of supply chain economics will be a more important determinant. "Cost, consistency and capacity will determine the gateways through which Asian imports enter the US," he said.
Unlike some east coast ports, which are scrambling to deepen their harbours and build new marine terminals, rail and roadway access, Los Angeles-Long Beach has the capacity and infrastructure in place to accommodate any immediate and short-term cargo growth that comes its way, said Los Angeles port executive director Gene Seroka.
He noted that Los Angeles-Long Beach is investing US$6 billion to expand the marine terminal, bridge, on-dock rail and roadway connectors that are necessary to handle growing cargo volumes in the coming decade.
But if east coast ports are to achieve the 60 per cent share of US container volume that Mr Conway predicted, the game changer will have to come in serving the manufacturing and distribution clusters that extend from Chicago and the Ohio Valley down through the mid-South and to Atlanta.
The Port of Savannah has intentions of reaching the lucrative Midwest and mid-South markets. Georgia Ports Authority executive director Griff Lynch the port's rail initiative known as the Mid-American Arc, will extend on-dock rail and inland port capacity to serve markets from Atlanta to Memphis and up to Chicago and the Ohio Valley.
Now that the east coast longshoremen have settled their labour dispute by avoiding a strike, it was now the turn of the west coast dockers to shoot themselves in the foot and do what they could to weaken the west coast to induce the employers to pay them twice as much as resident physicians, assistant district attorneys and law-degree holding FBI agents.
In this, they succeeded both winning themselves spectacular pay increases and driving away cargo to the east coast, which had won Peace for Our Time with their longshoremen the year before.
So now that over and has been for a year, the lines of scrimmage have settled for the moment at the 50-yard line. It will probably take another year before a likely outcome of this game will be discernable. |
