Strong cargo volumes expose ‘simmering cauldron’ of port issues

Drewry says falling energy prices likely to spur more spending by U.S. consumers.    Drewry says strong cargo volumes from Asia to North America’s west coast have “exposed severe shortcomings in the overall supply chain network.”
   “Current slack season volumes will give some respite to the USWC (U.S. West Coast) port congestion but fundamental issues need to be addressed by the industry’s stakeholders if this not to be a recurring theme,” the London-based consultants wrote in the current issue of their Container Insight Weekly.
   Drewry said  volume of cargo moving on the head-haul leg during September to the North American west coast ports hit an all-time record of 1.1 million TEUs, registering a year-on-year rise of 5.1 percent.
   “Asian boxes pouring into the U.S. ports surpassed the 900,000-TEU threshold for the first time ever, and the Mexican market remained strong with a rise of 17.5 percent. Only the Canadian trade lane remained subdued with loads scarcely any higher than a year ago, and September volumes were well off their June peak. On a 12-month rolling average basis, the eastbound WCNA (west coast of North America) growth rate has steadied at 5.2 percent for the third consecutive month.” Drewry said.
   Cargo volumes have remained high this fall, according to estimates by the National Retail Federation which said last week that nationally a dozen ports covered by its Global Port Tracker report handled 1.56 million TEUs in October, down 2 percent from September but up 8.5 percent from October 2013. NRF expects cargo volumes to be 1.41 million TEUs in November, up 4.8 percent November 2013, and 1.37 million TEUs this month, up 3.8 percent from the same time last year.
   Falling energy prices “are providing a strong spur to consumer spending,” Drewry said. For “American households that simply live from one wage packet to another, this fuel saving will generate extra disposable income which they are more than likely to spend rather than save.”
   It said that observation is muted by the fact the Conference Board’s U.S. Consumer Confidence index fell from 94.1 in October to 88.7 in November and NRF reported lower spending at the start of the Christmas spending season.
   Drewry said it is imponderable to know how much cargo in November was switched to containerships calling U.S. East Coast or Canadian ports or air cargo planes to avoid congestion at U.S. West Coast ports.
   It said West Coast congestion has resulted from a “simmering cauldron of issues: large 10,000-TEU ships being placed in the trade, scarcity of chassis, insufficient railcar availability, not enough truck drivers, lack of any progress to conclude a new port labor agreement (between the International Longshore and Warehouse Union and Pacific Maritime Association) which has occasioned go-slows, a shortage of labor and poor crane productivity.”
   Drewry noted only three longshore gangs are being allocated to larger ships, “when ideally they need five to six gangs to be worked efficiently. The result is that the larger ships require up to three additional days in port to complete their exchange, and even then they have to cut loose leaving behind empties and some loaded export boxes, which in turn further clog up the berths. Carriers have had to steam vessels faster than planned in order to try to get services back on schedule.”
   The G6 alliance has announced it will omit calls at the Port of Los Angeles on the next four sailings of one of its Asia-U.S. West Coast loops due to the “ongoing congestion.”
   Drewry said it “knows of two instances already where lines have been forced to charter in additional tonnage for round-trip voyages to maintain some semblance of a weekly service on the transpacific.”