North American West Coast ports - gearing up for battle

North American West Coast ports continue to rebound cautiously after the global recession and its lingering departure and some are gearing up for the next big battle.
The advent of an expanded Panama Canal in 2014 or early 2015, depending on construction progress, has two of the major United States West Coast ports preparing up for a major scrap with East Coast ports keen on getting a bigger piece of the action as larger vessels are attracted to their facilities.
The battle lines have been drawn on the West Coast at least. Some estimates have put potential losses for West Coast ports as high as 25% for southern Californian ports, which now handle 40% of United States import traffic from Asia.
“We have stepped up our game and have re-emphasized the advantages of coming to the Port of Los Angeles through infrastructure improvements,” says Marcel van Dijk, the Port of Los Angeles marketing manager.
“We expect it will be a small diversion, perhaps a loss of only 1% or 2%,” says van Dijk.
He also notes that the major railways serving the West Coast ports — Burlington Northern-Santa Fe and Union Pacific — won’t give up cargo traffic without a fight and are pouring billions of dollars into rail corridor improvements including double tracking.
The neighbouring Port of Long Beach, Director of Trade Development, Don Snyder, says: “We feel market share is ours to keep or not to keep. As a landlord, we are making of lot of infrastructure improvements and will be spending US$4.4 billion over the next ten years.” Projects at both major Californian ports range from bridge
replacements to allow larger ships further up the shipping channel to significant dredging opening the way for even larger container vessels, plus several terminal expansions.
The urgency of the battle preparation decreases the further north you get from the Panama Canal and the $5.2 billion expansion that will add a third lane to the waterway and allow Post Panamax vessels up to 120,000dwt access for the first time.
For the Port of Tacoma, less than a two-hour drive from the Canadian border, the impact of the expanded Panama Canal depends on several factors including fuel and rail rates, canal toll levels, and the capability of East Coast ports to handle the larger ships. But, the port has expanded its major Washington United Terminals container facility and finalized a ten-year strategic plan, which includes expanding the port’s general central peninsula to “efficiently handle the largest ships in the world, develop a bulk facility, and expand our rail capacity,” says Tara Mattina, Tacoma’s communications director.
For the Port of Seattle, there’s more concern over the rapid rise of the Port of Prince Rupert in British Columbia than to possible impacts of the expanded Panama Canal.
At the other end of the anxiety spectrum are the Canadian West Coast ports — Port Metro Vancouver and the Port of Prince Rupert — which are not expecting to lose any business to the expanded canal. Instead, there could be greater opportunity to put larger bulk vessels through the canal heading to Brazil and other buyers of coal, potash and agricultural products.
Port Metro Vancouver president & CEO, Robin Silvester, expects the canal expansions to have “minimal impact on the Vancouver Gateway” but he says the canal will continue to attract containers that could transit southern US West Coast ports. “It is not anticipated that the containers transiting Vancouver would relocate to US East Coast or Gulf Coast ports via the Panama Canal,” says Silvester.
PORT OF LONG BEACH, CA
The slower US economy put the brakes on growth in 2011 for the Port of Long Beach — ‘North America’s Best Seaport’ — a title won in 15 of the past 17 years as decided by importers, exporters, logistics and supply chain professionals in Asia.
Total volume reached 74.6mt (million tonnes) in 2011, compared with 76.6mt in 2010. The slow economy continued to soften performance as containers at 6,061,085 TEUs continued to slide by just over 6% compared with the same period in 2010. The best recent year was before the recession when the port handled 7,312,465 TEUs.
No surprise that the port’s director of trade, Don Snyder predicts container movements to remain flat for the rest of the year.
Bright spots include the recovery in auto shipments, which dropped 30% in 2011 to 140,000 units, but soared back year to date (YTD) through May to 105,283 units, a jump of 123%. Other gains have come through dry bulk (petcoke, coal, sulphur and soda ash) which were up 3.1% overall through May, while liquid bulk dropped 4.1% in the first five months.
The weak US dollar has boosted Asian demand for agricultural products such as grains, fruit, cotton and other food products and recycled waste paper and scrap metal are also doing well. A recently signed US free trade agreement with South Korea will also help boost agricultural shipments, says Snyder. China leads the way in imported containers bringing in mainly consumer goods to North American consumers.
However, the big news for the Port of Long Beach is the $4.4 billion being spent on infrastructure improvements over the next decade.
The Middle Harbour Redevelopment Project fills in the water slip between two existing terminals and expands their footprint by about 100 acres creating a container terminal by 2020 that will have enhanced on-dock rail capacity, shore power hook ups and the ability to move twice the cargo while producing half the
air pollution. The replacement of the Gerald Desmond Bridge will be
completed by 2017 giving ships a higher vertical clearance in the main shipping channel and allowing larger ships into the port’s back channel terminals.
There is landfill expansion work and other improvements at Pier T operated by Total Terminals International; Pier G run by ITS is upgrading and filling in half of a slipway, upgrading its on-dock rail, reconfiguring its yard and providing more modern buildings; and the port is also seeking approval to build a new cargo terminal on Pier S, a 160-acre parcel of vacant land.
PORT OF LOS ANGELES, CA
The worst seems to be over for the busiest container port in all of North America as Los Angeles’ performance of 7.9 million TEUs in 2011 eclipsed 2010 slightly and was the best performance since 2007 before the global recession.
The good news is continuing into 2012 and YTD through May container traffic was up 6%. Not that the port is getting too excited as it struck a US$954 million budget for the new fiscal year from 1 July, which was less than it used in 2011 by 2.3% or $22.5 million.
Exports are leading the recovery, says Marcel van Dijk, POLA marketing manager, with a 15% surge overall and strong gains in agricultural products (there were big gains in grains, soya meal and soya beans), waste paper, and scrap metal.
As the port heads into the traditional ‘peak season’ for container traffic through late July, August and September, there are signs that retail spending will be at a more normal level despite the weaker economy and the distraction of an upcoming federal election in November.
China is still gobbling up 35% of all export containers passing through the port, followed in ranking by Taiwan, South Korea, Japan and Hong Kong. Waste paper, plastic resin, animal feeds, and bulk agricultural products such grain and soya meal continue to lead the way.
The Top 6 imports through POLA were furniture, auto parts, apparel, electrical goods, footwear, and toys, with auto parts up a healthy 33% in 2011 over depressed 2010 levels.
With its five-year $1.3 billion port growth plan underway in 2010, the highlights of 2011, according to van Dijk, include the $300 million dredging of all shipping channels to 53ft from 45ft, a move that has allowed larger container vessels more navigational comfort.
Major projects included China Shipping Container Terminal improvements with a 1,200-foot wharf extension and 38 acres of additional backlands; and the TraPac Container Terminal did a similar-sized wharf expansion and added 60 acres of backlands and next year will finally get rail onto the dock — the last in the port to bring trains straight to the ships.
The APL Pier 300 gained 40 acres of landfill and a 1,200-foot dock extension and other improvements are at the design stage for work that should begin before year’s end.
In May, the POLA became the first seaport in North America and the Pacific Rim to adopt an international clean air programme that rewards ocean carriers for bringing only their newest and cleanest vessels to the port.
Similar to programmes at several European ports, the clean ship incentive programme rewards vessel operators for adopting voluntary engine, fuel, and technology enhancements that reduce ship emissions beyond those already set by the International Maritime Organization (IMO).
On shore, the port has also adopted a clean air truck program that enforces a 2007 and newer engine standard for the huge truck fleet servicing POLA.
PORT OF PORTLAND, OR
With its third best tonnage total ever 2011, the Port of Portland has continued to recover from the 2009 global economic meltdown with a stronger performance so far through April 2012.
Last year, the port handled 12.1mt compared with 11.9mt in 2010 and 12.8mt back in 2008 before the recession hit. Biggest customers are Japan, South Korea and China.
Getting back to those pre-recession figures seems an achievable target for the port where growth is primarily driven by container movements, which were up 9% in 2011 to nearly 200,000 TEUs. Portland signed a 25-year lease with container terminal operator ICTSI Oregon Inc. in February 2011 and has seen container volumes grow.
Export containers shipped went up by 27% last year and imports by 5% as the TEU total reached 198,179. To the end of April 2012, total container numbers are up 10.7% overall with loaded containers up 14.6% as the recovery continues.
Grain exports remained flat in 2011 at 4.3mt; mineral bulks were also steady at 4.7mt but YTD through April had dipped by 21%; breakbulk through the port, which reached 853,769 tonnes in 2011, was showing signs of recovery, up 3% YTD; and auto shipments, which dropped 11.5% in 2011 to 234,048 units, were up by a surprising 64% through YTD April as the American driving public revived its love affair with Asian imports.
The port recently amended the lease of the Kinder Morgan soda ash facility, which has led to a $9.5 million investment by the terminal operator to replace the existing shiploader by early 2013.
Other recent highlights include the first exports of Ford vehicles to South Korea; the first raw log exports through Portland since 1997; an expanded weekly container service by Hapag-Lloyd and Hamburg Sud; a new Subaru parts distribution centre, regional offices, and training facility now importing auto parts through Terminal 6; and the port’s industrial park receiving the top national Phoenix Award for brownfield redevelopment.
PORT VANCOUVER USA,WA
This southern most of Washington State ports is celebrating its 100th anniversary in 2012 and believes it has much to be happy about in adopting a theme of ‘A century of possibilities’.
While cargo volumes were down slightly in 2011 at 5.4mt — a drop of 1.8% on the 2010 performance — but operating income was still up $5.7 million. Overall cargo trends were steady with wind energy (up 321% at 106,182 tonnes), pulp, scrap metal (up 19% at 554,507 tonnes) and heavy lift project cargoes leading the growth while autos, wheat (down 2.7% at 3.6mt), and bulk minerals headed the decline thanks to the recession and global events.
The Columbia River port has received two federal competitive transportation grants totalling $25 million and will use much of that to improve rail links to support what new executive director,Todd Coleman, calls “a period of unprecedented growth.”
The revamping of rail access means some existing facilities will be moved, others will change and some will expand. United Grain Corporation will complete an $80 million soya and corn export and storage facility by the fall; Great Western Malting relocated to a new area within the port and upgraded its facilities; and mineral bulk exporter Kinder Morgan will operate new unloading facilities in order to make way for unit train rail tracks.
BHP Billiton has signed preliminary agreements with the port and has begun construction of a new potash export facility at Terminal 5, bringing a brownfield site back to productive use, complete with new loop rail track.
PORT OF SEATTLE,WA
Steady as she goes could have been the theme for the Port of Seattle in 2011 as throughput tonnage was almost identical to 2010, being up only by about 30,000 tonnes at 22.8 million
Total TEUs moved dropped slightly to 2,033,535, and that was down about 106,000 TEUs on 2010. Bulk grain, petroleum and molasses were all at similar totals in 2011 as they reached in 2010 with only grain in slight decline.
Seattle Seaport Media Officer, Peter McGraw, says 2012 is primarily flat and he expects tonnage numbers to be down slightly at year’s end unless public buying habits for consumer goods pick up. Much of the blame for the drop in TEUs could be placed on the decision of the Grand Alliance container line to move camp to rival Port of Tacoma, taking with it about 20% of Seattle’s box count.
McGraw says other lines such as MOL and PSX have moved in but volumes will still be down.
Among the highlights of the past 18 months, has been the arrival of three Super Post-Panamax gantry cranes last November with another three due in July as the four container terminals in the port upgrade equipment.
Seattle offers dual shore-side power hookups at its newer Smith Cove cruise facility; has an At Berth Clean fuels programme (ABC) which encourages shipping lines to use low sulphur diesel fuel while in port; and like most other West Coast ports has a clean truck campaign which has retired almost 300 trucks of 1994 vintage or earlier, removing over 500mt of sulphur dioxide from the environment so far.
PORT OF TACOMA,WA
A slight rise in container volumes from 1.46 to 1.49 million TEUs was the Port of Tacoma’s reward for a year of effort in 2011 while other cargoes increased at higher rates. Containers continue to rule the roost in this Washington port that goes head-to-head with the neighbouring Port of Seattle, but were flat through May 2012 slightly behind the pace of 2011.
But, there was good news in March with the Grand Alliance — a consortium of OOCL, NYK Line, Hapag-Lloyd and ZIM —
Aerial view of the Port of Seattle.
announcement of a service through Tacoma instead of Seattle from late June and this is expected to be a further boost of 32,000 boxes a year. And a new Australia–New Zealand service operated by Hamburg Sud and Hapag-Lloyd in partnership with US Lines will start this summer and is expected to mean another 30,000 TEUs for the Port of Tacoma through the recently expanded Washington United Terminals.
The total volume of all cargoes in 2011 reached 15.7mt, which was up 700,000 tonnes on 2010, but still well behind the 18.4mt of 2008 before the global recession struck.
Highlights of the year to May 2012 include a dramatic 93% rise in breakbulk shipments at 94,480 tonnes, while gypsum was up 59% at 80,458 tonnes, and auto shipments reached 60,487 units, up 12%. These advances were offset by container movements being down less than 1% in the first five months of 2012, while raw log shipments, which started again in 2010 after an absence of several years, fizzled somewhat, dropping 48% through May at 135,014 tonnes.
Roll-roll-off vessel calls jumped in the first quarter of 2012 and these ships tend to be larger and carry more cargo.
However, bulk grain shipments continue to decline, reaching 5.4mt in 2011 after a recent peak of 6.2mt in 2008. Grain through May in 2012 was down a further 4.5% over the same five months of 2011.
With two-way trade with its major partner China worth US$14.6 billion in 2011, the Port of Tacoma largely imports consumer goods such as clothing, toys, sports equipment, furniture and housewares. The major export markets are Japan, South Korea, China,Taiwan and Indonesia and all were up in 2011 over 2010 trading figures.
PORT METRO VANCOUVER BC
Another record year at 122.5mt in 2011 had Port Metro Vancouver (PMV) as the busiest and most diverse of all port facilities on the West Coast of North America. Since two ports on the Fraser River amalgamated with the Port of Vancouver in 2008 there has been little looking back. Diverse cargoes from coal to wood chips, wheat to crude
petroleum enabled the port to fend off the effects of the Japanese tsunami and earthquake in March 2011, a shaky global recovery, and market disruption due to the debt crisis in Europe, says PMV President & CEO Robin Silvester. At 3,024, vessel arrivals in 2011 were up 7% and gross registered tonnage climbed by 8%.
Coal continues to be the biggest single commodity shipped from the port and in 2011 reached 32.7mt, up 8% over 2010. With the decline in
demand for steelmaking coal because of the tsunami and global recession hangover, energy coal exports flourished through Westshore Terminals and Neptune Bulk Terminals, both of which are amid extensive equipment upgrades in 2012 to boost capacity. A decline in steelmaking coal by 6% in 2011 was more than offset by a 45% jump in shipments of energy coal.
Container traffic at 12.9mt or 2,507,032 TEUs, was down only 1% last year over 2010, but the box count at 1,084,240 through May 2012 is 7.4% higher over the same five months of 2011 as North American import demand grows.
Grain, which was down 5% in 2011 over 2010 at 15.5mt has also bounced back in 2012 and at the end of April was 11% ahead of the same four months of 2011. Among the fertilizers handled by the port, sulphur was up 25% YTD April after slipping 8% in 2011 to 3.4mt. Potash was 8% lower than in the same YTD period of 2011, but that wasn’t seen as surprising given 2011 was a record year at 7.2mt — up 30% over 2010.
Breakbulk declined in 2011 by 4%, but that followed a healthy gain of 15% in 2010. Growth so far in 2012 has been through log and lumber exports to China and increasing inbound metals volumes from South Korea and China. Moderate breakbulk growth is expected this year as forest industry activity continues to drive domestic and foreign export volumes and for the first time, China is the No. 1 importer of British Columbia’s forest product exports.
Auto volumes, which plummeted by 22% to 298,113 units in 2011, rebounded strongly in 2012 with a record 44,000 units in March leading the way to a 30% jump over the same three months of 2011. Through May auto handling was still ahead of any similar period since 2009.
Cruise voyage numbers were up 15% in 2011 over 2010 but were expected to decline slightly in 2012. However, with fewer but larger vessels the passenger count of 2011 of 663,425 was expected to rise moderately giving the port two straight years of improving figures after a ‘fairly dismal 2010’.
Shore power was used by over 35 cruise ships during the year and that was the equivalent of taking well over 650 cars off the road, says the port. PMV is now looking at the feasibility of extending shore power use to its container terminals.
And in capital spending, PMV, government and industry have over $9 billion in projects in the next few years to further develop the Vancouver Gateway to the world. The 13 projects range from upgrading existing road and rail infrastructure at Deltaport — Canada’s largest container terminal — to conducting geotechnical investigations at Roberts Bank in the
PRINCE RUPERT, BC
With a record 19.3mt throughput in 2011 and a best on the West Coast 17% increase over 2010 performance, the Port of Prince Rupert has captured their rivals’ attention and for some it’s seen as a bigger threat than the Panama Canal expansion.
Coal was up 16% in 2011 over 2010 and grain jumped by 21% and “things are on a roll,” says Shaun Stevenson, the port’s vice president of marketing and business development. Export laden containers were up 59% in 2011 with “real significant growth” in forest products, particularly sawn lumber, he adds.
There’s been no easing off in 2012 and in the YTD through May, the Prince Rupert registered an 87% boost in container traffic at its soon-to-be expanded Fairview Container Terminal and is referring to itself as the fastest
growing port in all of North America. Coal was up 15% in the same five months while grain shipments were flat.
Fairview is expected to add a further 500,000 TEUs to its capacity by 2015, but it is not alone. The coal export facility run by Ridley Terminals is also doubling capacity to 24mt by 2015 with work now well underway. Ridley shipped a record 9,638,520 tonnes of coal and petcoke in 2011 and that was 16% ahead of 2010.
No wonder Stevenson says the annual 500 deep-sea vessels calling on the port now are expected to grow to 1,000 to 1,200 in six or seven years as the value of the special gateway the port offers to the US Midwest and to Asia is more widely appreciated.
Cruise went through a rebuilding year and saw a dramatic decline in large ship calls at about five for the season. The port has pushed ahead with waterfront development around the cruise dock and is hoping for a revival in 2013.
Meanwhile, the opening up of Ridley Island to further development is underway with a $90 million road/rail utility corridor project that could attract a new potash export terminal and maybe an LNG Terminal. The coal terminal on Ridley is expected to tie in to the development allowing it to handle longer trains in future.