Banging the drum yet again……

August 8, 2006 by SwizStick  
Filed under 3PL, Contract Logistics, Seafreight, Supply Chain Management

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I hope no one is sick of hearing us comment on the port congestion problems plaguing the U.S. because it is a very serious problem that has far-reaching consequences that extend globally, as delayed shipments will inevitably lead to schedule problems that will in turn affect other ports of calling.

In this month’s issue of World Trade Magazine they have a detailed article entitled “The More Trade Grows, the Worse U.S. Port Congestion Becomes” that paints a pretty dark picture of port and rail capacity for the foreseeable future:

One U.S. railway official suggests that last year’s easing of congestion was misleading. “Quite honestly,” he says, “what happened after 2004 is that many steamship lines pulled their services out of southern California, moving them further north. That took the pressure off.” Those lines, he adds, are coming back: “In 2006 and 2007, potentially, you’re going to see the same types of problems you had in 2004, if not worse.”

The longer term is no more cheerful. One industry analyst, John Vickerman of Transystems, argues that three-quarters of major U.S. ports his group studied will suffer “significant capacity problems” by 2010.

And, America’s congestion is not just a problem for America. Lim Hyun-churl, First Secretary, Maritime Affairs and Fisheries, at the Korean Embassy in Washington D.C., said, “We are very concerned about this. The ships of large companies are very punctual in their calls—they go to Los Angeles, to Kobe, to Busan to Dubai. If the ship is grounded in Long Beach, the total schedule is messed up.”
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By most measures, U.S. ports are notably less productive than their Asian or European counterparts. One source reports that Asian ports now handle 18,500 TEUs annually, per acre of port facility, compared to 6,800 in Europe and 3,900 in the United States.

The report sites a number of reasons why the future is looking bleak: “Lack of investment capital” (the money isn’t there and probably won’t be coming), “lack of political influence” (um….there isn’t any), and a “lack of public understanding” (the public doesn’t have a clue yet).

What do we do?

Many say a massive campaign to educate political leaders and the public is required. U.S. ports, Jonathan Benner stressed, “are a vital issue of national security. Despite the lunacy of much of what was said on the Dubai ports issue, that debate was useful in that it did focus on the fact that the maritime infrastructure is a vital national asset.”

Rob Quartel questions whether ports face capacity limits: “There’s a big difference between capacity and capability. Capacity, at current productivity levels, may be constrained, but if you raised capability to a world standard, then capacity is probably not constrained for a long time. If you increased American throughput, we would not have a capacity constraint.”
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Major infrastructure improvements are taking place, both in the ports and inland. Norfolk Southern, for example, is in the early stages of a $150 million effort to clear its Norfolk-to-Chicago route for double-stacked container trains, a task it hopes to have completed in three years.

While such steps will add capacity, the U.S. ports and the inland rail and truck routes that carry container traffic face the unenviable task of needing to run faster just to stay in place.

How rapidly might matters get worse? Jonathan Benner comments: “That’s a really good question. Things are getting worse as a function of the volume of trade. The capacity of the ports and at the water’s edge is just not growing as fast. It’s like someone being told they have arterial disease, but they refuse to spend the money to get their arteries cleared.”

All emphasis in quotes are ours. Read the whole thing here, a highly recommended must-read. The same article also has an interesting interview with former U.S. Maritime Administrator John Jamian.

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