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US ports fight for appreciation and money

Hansa - epaper ⋅ Ausgabe 3/2020 vom 04.03.2020

Trade war, societal perception, federal support for infrastructure investments: US ports currently have several major issues on their agenda. A new five-year plan is imminent

In terms of transhipment volumes, US ports have certainly benefited in recent years from the opening of the expanded Panama Canal - although the trade war between the US and China caused a decline in transpacific volumes in 2018 (see info box). Container shipping companies in particular are sending ever larger ships to the quaysides. This development has created a significant need for infrastructure expansion. Many ports have since ...

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... modernised their facilities. But there is still a need for public and private financing.

In a market report, investment and consulting company Jones Lang LaSalle (JLL) said, while larger ships are reducing the per container cost to ocean carriers, these larger ships are also contributing to congestion around ports.

Therefore, ports are investing in rail capacity which would relieve some of the congestion. They are also trying to push all non-container operations such as transloading off terminals in order to have more space to handle and store containers.

However, the US trucking industry is struggling to find enough long-haul drivers, the report states, adding that »in order for ports to continue providing reliable service to inland locations, they have taken to developing rail-served inland ports. Rail service to these locations is generally cheaper and more reliable than truck service. Inland Ports can potentially help alleviate this issue of long-haul driver shortage.« As larger vessels create operational issues at large ports, there is an increased need for alternative transportation solutions from ports like trains and trucks. Another solution gaining traction is Short-Sea shipping, specifically containers hauled on barges or smaller vessels.

Containers volumes shipped on the eastbound transpacific route shrank by -2.5% in 2019, following a sharp drop in imports into the US in the fourth quarter, maritime analysts of Alphaliner say. Although volume growth was still positive in the first three quarters, recording a marginal growth rate of 0.5%, they shrank by 10.4% in the fourth quarter as there was no repeat of the cargo front-loading that took place in the last quarter of 2018 to avoid the punitive import tariffs that were to be imposed on Chinese imports to the US. According to the market report, this decline is the first that was recorded on these routes since 2009. While the trade war led to a decline in volumes from China and Hong Kong of 10.5% to 10.2mill. T EU, other Far East export origins recorded a combined growth of 17.1%.

Chris Connor, the new CEO of the American Association of Port Authorities


The biggest challenges for US ports are being recognized and appreciated »for all the good they do«. Their societal contributions are oftentimes misunderstood or under-appreciated

However, even the signing of »Phase One« by the US and China in January is not enough for explicit optimism. The agreement that aims to ease some of the on-going trade tensions, »is not expected to reverse the decline of Chinese exports to the US in the near term,« Alphaliner says. Tariffs of 25% remain in place on 250 bn. $ worth of US imports from China.

Funding and investments in ports and infrastructure is as well a major topic on the agenda of Chris Connor, the new CEO of American Association of Port Authorities (AA PA). He says: »As key drivers of international trade, job creation, economic development and coastal environmental stewardship, seaports play a central role in lives of most people, although it isn’t always directly apparent, particularly to those who don’t live near a port.«

AA PA is currently in the process of surveying planned infrastructure investments for the period between 2021 and 2025. According to Connor, it is too early to predict the outcome of this survey. However, initial indications are that the cumulative total of planned investments will exceed the 155 bn. $ indicated from the 2016-2020 survey. The CEO emphasizes, a factor that heavily influences planned port infrastructure investment however is the degree to which the federal government invests in the connecting infrastructure with ports: »The infrastructure investments that ports and their private-sector partners are planning must have concomitant government investments.«

The biggest challenges for US ports therefore are being recognized and appreciated »for all the good they do.« For Connor, their societal contributions are oftentimes misunderstood or under-appreciated. This may result in difficulties to obtain the necessary federal/state/municipal funding.

»There were, and continue to be, federal policy and funding challenges by America’s port authorities in infrastructure development, port and cyber security, and environmental enhancements/protections during 2019,« he adds. However, AA PA was pleased that many port-related programs were included in the two legislative appropriation packages released by Congress and signed by the President in late December 2019. The FY’20 spending bill makes significant funds available for port infrastructure development - waterside and landside - and ensures the timely inspection of goods moving through America’s ports. Ultimately, however, much more federal support is needed, but this package reflects AA PA’s ongoing priorities.

With an eye on the trade war between the US and China, AA PA sees itself as »a strong free trade advocate.« Connor cites a study of late December 2019 by the US Federal Reserve which found that the tariffs have hurt American manufacturing rather than helping it.

While President Donald Trump signed phase 1 of a vital new trade pact with China, »which is good news for the US and America’s seaports«, AA PA is also pleased to herald the House and Senate approved US-Mexico-Canada Agreement (USMCA). Once approved by Canada, the association hopes it will modernize and address tariff schedules, commodity regulation, goods standards, regional content requirements in manufacturing, digital trade and labor standards.

North American ports stand to benefit significantly in this agreement from the increase in trade and travel between the three nations, and the certainty that the movement of goods and people won’t be hampered by unanticipated trade restrictions or tariffs. »We do emphasize that seaports, which are domestic and international trading hubs, are vital economic engines that must be supported at the national level,« Connor says, adding that seaport cargo activity accounts for over a quarter of the US economy, gen- erating nearly 5.4 tr $ in total economic activity a year and more than 378 bn $ in federal, state and local tax revenues. Therefore, »it’s important for federal policymakers to recognize that international trade, both exports and imports, is good for American workers and the national economy, and actions that would inhibit trade have sizable negative repercussions to American jobs, and to American goods and services competitiveness overseas,« he says. Based on these assumptions, AA PA is urging the Administration and Congress to ensure U.S. seaport and other employment is not negatively impacted by trade actions, as business people, ports and their private sector partners are concerned about making significant investments in an unstable trade environment. »Eliminating that uncertainty is especially important as this Administration seeks to find partners to improve America’s infrastructure.«

Because trade »supports everyone«, AA PA is encouraging federal policymakers to work swiftly to restore market certainties and forge paths to expand exports, rather than create new import restrictions, « the CEO concludes.

In the meantime there is at least one piece of good news. The US Department of Transportation’s Maritime Administration (MARAD) announced that it has awarded more than 280mill. $ in discretionary grant funding through the new Port Infrastructure Development Program.

Long Beach: Billions for infrastrucuture

As the second-busiest container seaport in the United States, the port of Long Beach handles trade valued at more than 200 bn $ annually and is connected to 2.6 million jobs across the nation, including more than 575,000 in Southern California, Executive Director Mario Cordero emphasizes. Following up on a record-breaking 2018, the port handled more than 7.6 million container units in 2019. »Fallout from the ongoing trade war with China will likely continue to slow cargo growth in 2020. Officials remain optimistic »that the United States and China can resolve their differences and keep their respective economies growing, evidenced by the recent announcement of a phase-one trade deal.« Trade with China accounts for nearly 70% of the imports coming into Long Beach and 40% of exports.


The Port has invested in capital projects to strengthen its competitiveness, including programmes that have opened the port’s docks to the biggest ships, its terminals to the longest trains and cleanest fleet of drayage trucks. »We’ve built a better, big-ship ready port ahead of our US competitors,« says Cordero.

Later this year, the replacement for the aging Gerald Desmond Bridge will open to traffic, providing for efficient movement of trucked cargo as well as an important route for regional commuters. »Thanks to its role in providing an important gateway in the ports complex for a significant share of imported cargo traveling to all parts of North America, the new 1.47 bn $ cable-stayed span is already known as the »bridge to everywhere,« it is emphasized.

Nearby, the Long Beach Container Terminal is in the final phase of construction to create what officials call »the greenest, most technologically advanced terminal in North America«. The 1.5 bn $ project adds on-dock rail capacity, shore power hook-ups and a longer wharf.

At final build-out in 2021, LBCT is planned to move twice the cargo of the two terminals it replaced, with far less air pollution and an annual capacity of more than 3 million cargo containers.

Another 2 bn $ in projects planned over the next decade include improvements to Port roads and channels, along with a 1 bn $ investment in a rail network. The centerpiece of the railway plan is the planned Pier B On-Dock Rail Support Facility, which will give the Port additional room to assemble longer trains, limit truck traffic and reduce environmental impacts. Construction is scheduled to start in 2022, with the entire 870mill. $ project completed by 2032.

Each train is said to eliminate the need for up to 750 truck trips, which speeds the flow of goods across the country while reducing local road traffic.

In pursuit of its goal to become the world’s first zero-emissions seaport and along with the Port of Los Angeles, the port of Long Beach in 2006 first enacted the San Pedro Bay Ports Clean Air Action Plan, a comprehensive strategy for reducing air pollution from every port-related source. »The CAA P has succeeded. Since 2005, diesel emissions at the harbor have dropped by 87%,« it is said. A recent update to the Clean Air Action Plan set a goal of shifting to zero-emissions cargo-handling equipment by 2030, and zero-emissions trucks by 2035.


Los Angeles: »Efficient utilization is crucial«

In Los Angeles, port officials say: »Making the most of our existing assets by utilizing our facilities more efficiently is crucial.« To that end, is is planned to collaborate with terminal, trucking and technology partners to implement a universal truck reservation system, eliminate on-site chassis storage, and upgrade connections throughout our on-dock rail network.

In addition, the building of a Cyber Resilience Center is planned for this year. This facility is supposed to serve as a clearinghouse for sharing information about cyber threats among terminal operators and other stakeholders.

In terms of cargo throughput, the port states: »We have experienced declining US exports for 13 consecutive months. We expect 2020 to continue to be impacted by the trade war.«

The large container ports in the south of the US west coast are getting the receipt for the trade policy of President Donald Trump. Last year, Los Angeles, the largest US port on the Pacific Ocean, was unable to maintain the volumes from 2018. According to official data, 9.34mill. T EUs passed the quaysides from January to December - a decrease in comparison to 9.46mill. T EU in 2018. However, the port authorities are not entirely dissatisfied. The result for 2018 was characterized by the fact that many importers had filled their warehouses out of concern about the punitive tariffs - it was the second best year in its history.

Houston: 232 mill. $ Capital Plan

In the US Gulf, the Houston as No. 1 US port in foreign waterborne tonnage, has a 232mill. $ million Capital Plan for 2020, focused primarily on container terminals, as well as Project 11, which is the name for the Houston Ship Channel Widening/Deepening project. That project has been under study by Port Houston and the U.S. Army Corps of Engineers for the past four years, and now it is nearing completion, officials say. Plans call for widening the proposed Bay Reach segment from 530 feet to 700 feet and additional channel widening.

»Generally, infrastructure needs and funding for channel dredging are challenges ahead, but we and the industry are committed to collaboratively achieving this deepening goal because it will go a long way to ensuring long-term prosperity for everyone,« the port authority states. Widening the nation’s busiest waterway is planned to allow for improved two-way traffic. Houston has nearly 9,000 vessel calls and a total of more than 20,000 ship movements within the port.

As the country’s biggest breakbulk port, Houston has has handled a considerable amount of wind components in recent years. In 2019, the amount of wind power equipment handled totaled 54,229 short tons, which was »a big increase« from the previous year.

In addition, it was a record-setting year, just short of 3mill. T EUs. Officials are projecting continued growth given that the amount of resins being produced by petrochemical plants along the Houston Ship Channel continues to increase. As well, a 5% increase in containers in 2020 is projected, stemming from an increase in loaded export boxes. General cargoes also are showing growth, though steel volumes are softening.