Strategic View: Does order matter?

   Sometimes order matters a lot, and other times not so much. For example, if you order a turkey and Swiss cheese sandwich or a Swiss cheese and turkey sandwich, you will get the same sandwich either way. But if you are dealing with a combination lock, it makes a big difference if you try the sequence 24-12-7 or 7-12-24. When it comes to ocean carrier container calls at ports, it is believed that being first port of call is very important. Is this true? Is this true everywhere? This is an important question because it speaks to the ability of a port or terminal to grow the container volumes it handles.
   The results of reviewing 2015 port call data for the larger West and East coast ports using Datamyne’s data is summarized in the following chart. Some of them have significantly larger local markets than others. However, all of these ports handled more than 2 million TEUs in 2015, have high capacity dual-rail access and serve a significant hinterland region. Therefore, is a reasonably comparable set of ports. The chart shows the share of vessel rotations’ volume discharged at each port when the port is the first or the second port of call on the string. This chart shows the import volumes of Asian and European/Mediterranean origins when the total discharge of vessels were higher than 2,000 TEUs. It is immediately apparent that at West Coast ports, a much larger share of imported volumes is dropped off at the first port of call than at the second port of call, compared to East Coast ports. The highest shares of volumes are 50 percent in New York and Savannah, closely followed by Charleston.


Source: Datamyne, Moffatt & Nichol and JLL

   The table shows the average share of volumes discharged at the first, second and third ports of call and the difference in first, second and third call shares for the ports shown in the chart. For the East Coast ports, the difference in shares averages 26 percent, slightly less than half the difference on the West Coast.


Source: Datamyne, Moffatt & Nichol and JLL

   The results shown in the chart and table were also reviewed for the larger population without restricting the trade lane and number of exchanged boxes, but the results were not substantially different. Therefore, the overall conclusion is that being the first port of call matters on the East Coast, but a great deal less compared to the West Coast. This has implications for potential development of new ports and/or port-handling capacity.
   As the size of vessels calling at both West and East coast ports increases, it is important that static storage capacity at container terminals, intermodal capacity and highway capacity on and near the terminals also increases. Given the difficulty with increasing intermodal and highway capacity around ports in heavily urbanized areas, it may be necessary to develop new ports to handle growing container volumes, provided they are in locations that have these hinterland connectivity attributes.
   Kemmsies is with JLL Ports, Airports and Global Infrastructure and can be reached by email at walter.kemmsies@am.jll.com, while Ali Rezvani is with Moffatt & Nichol and can be reached by email at arezvani@moffattnichol.com.