Agricultural exporters concerned about shift to U.S. East and Gulf Coast ports.
The Pacific Merchant Shipping Association (PMSA) is expressing concern about how long containers are spending at container terminals at the ports of Los Angeles and Long Beach before they are picked up for delivery as well as eroding share of the container shipping business at West Coast ports.
PMSA, which represents the interests of owners and operators of marine terminals and vessels, says average “dwell time” for containers at the two southern California ports rose to 3.51 days in November from 3.26 days in October and 2.89 days in September, “the highest it has been in the last two years.”
Additionally, it says 13 percent of all containers were sitting at terminals for more than five days before getting picked up for delivery as compared to 11 percent of containers exceeding a five-day dwell time in October and only 5 percent in September.
“The increase in dwell time greater than five days is of concern,” stated Jessica Alvarenga, manager of government affairs at the Pacific Merchant Shipping Association. “Terminals rely on containers getting picked up in a timely manner in order to handle more containers efficiently.”
PMSA said, “It is absolutely critical that containers continue flowing out of terminals in less than three days.”
PMSA said San Pedro Bay ports saw 1,454,166 TEUs come through their ports in the month of November.
“There’s no doubt we’ve seen a surge in cargo because of the concern over rising tariffs,” Gene Seroka, executive director of the Port of Los Angeles, told American Shipper this week.
Fewer longshoremen are working, including some of the most experienced and productive during the holidays, and the ports also will be closed on Christmas and New Year’s Day and have shortened hours on Christmas Eve and New Year’s Eve.
Erhan Ergin, regional vice president for DHL Global Forwarding’s U.S. West region, also said his company “has observed West Coast port congestion due to the combination of the holidays and increased volume. We saw this same congestion around the Thanksgiving holidays, and similar congestion is expected around the Christmas holidays.”
Peter Friedmann, executive director of the Agricultural Transportation Coalition, said that in a meeting he attended Wednesday, congestion at terminals, lack of free time and detention and demurrage charges were identified as the top issues facing agriculture shippers today.
The Ports of Los Angeles and Long Beach are, by far, the nation’s two largest container ports. The Northwest Seaport Alliance (the jointly marketed and administered ports Seattle and Tacoma) and Oakland are numbers five and eight, respectively.
But PMSA also is highlighting the eroding market share of West Coast ports as a major concern.
Writing in the December issue of its newsletter, PMSA Vice President Mike Jacob said the good news was “2017 and 2018 saw West Coast container volumes finally grow past their prerecession peaks of 2006 in California and 2005 in the Puget Sound. After a decade of an effective rate of growth of a cumulative zero percent, we finally turned a corner these past two years.”
However, he said, “While our volumes were down to flat, our market share erosion has been palpable. At just over 30 percent of total North American containers, California’s seaports in 2015-2017 had a lower market share than every year going back to 1997.”
He cited data from the American Association of Port Authorities that shows the California ports saw their market share of North American container traffic as measured in TEUs dropping from 35.5 percent in 2006 to 30.21 percent in 2017. If only U.S. ports are considered, California ports have seen their share drop from 41.1 percent to 37.6 percent.
“The Puget Sound numbers are just as discouraging,” said Jacob.
Calling the extended dwell time in the ports of Los Angeles and Long Beach “absolutely catastrophic,” Friedmann said, “It is, in my view, unsustainable and a reason why the market share of import containers continues to move from West Coast to East Coast,” he said. “It is exasperating.”
He said a long-term shift in market share is a particular concern to shippers of agricultural products and explained that if fewer empty containers or direct routes to Asian countries such as China, Korea and Japan are available, that could drive up costs.
“If the empty import containers are in the East and Gulf Coast, we are not going to be able to dray our largest agricultural exports such as hay all the way from West Coast origins all the way across to Savannah, Charleston, New York and Norfolk. The same thing for lumber.”