exports usually don’t get much recognition vis-à-vis imports, unless you’re
talking about certain sectors such as airplanes or farm goods. But this year,
they’ve been the darling of East Coast seaports, many of who have seen a
healthy rise in eastbound trans-Atlantic volumes, which is helping to offset a
ton of overcapacity in the trade lane.
Last year, five ocean carriers-Zim, CMA
CGM, China Shipping, and Evergreen’s Hatsu and Italia Marittima brands-launched
new services in the trans-Atlantic that contributed to overcapacity in the
trade lane. Fortunately, a decision earlier this year by Norasia to discontinue
their service in the trans-Atlantic coupled by Maersk Line’s scale-down of
capacity helped restore some balance.
The weak U.S. dollar and strong European economies have really begun to drive
export growth, and likewise, eastbound trade volumes on the trans-Atlantic.
Specifically, in Western Europe, U.S. exports of low-value commodities like
paper, wood products, and certain chemicals are boosting volumes, while in
Eastern Europe demand is growing for American-made machinery, construction
equipment, and automobiles. Overall, the euro zone is expected to grow by close
to 3 percent this year and 6 percent in 2008. Emerging European countries are
likely to expand by 6.4 percent this year and 6 percent in 2008.
In another sign of shifting trade flows, Maher Terminals announced in August
that it was suspending its Saturday gate operations at its New Jersey terminal
because of underutilization. Although Maher had hoped to have 500 deliveries
per Saturday shift, the average only amounted to 156. “It is not practical to
sustain the Saturday gates with this level of activity,” the company stated.
However, Maher, which handles about half the containers moving through the
ports of New York-New Jersey (www.panynj.gov), said it would continue to
operate its extended gate hours on weeknights.
Furthermore, China Shipping Container Line (www.chinashippingna.com) has
disbanded its ‘round-the-world service to the East Coast, which included calls
at Halifax, New York-New Jersey, Norfolk, Savannah, and Miami. However, the
carrier is preparing to initiate another all-water service to the East Coast.
Despite the current market conditions, the larger picture is decidedly upbeat,
say maritime executives. And, the ongoing expansion at major East Coast ports
means future trade volumes-both imports and exports-are heading much higher.
The Suez solution
many ocean carriers have seen increased bookings for all-water service from
Asia to the U.S. via the Panama Canal, the Asia-U.S. routes via the Suez Canal
have been getting more popular, in big part because of the pending labor
negotiations on the West Coast.
Shippers are making sure their supply chains are diversified in advance of next
year’s contract talks so as to avoid the meltdown that occurred during labor
negotiations in 2002. In fact, the East Coast all-water market could even feel
a pinch due to many shippers’ contingency plans.
According to the Trans-Pacific Stabilization Agreement (TSA), “It is also
likely that many shippers, especially larger accounts, will advance some of
their cargo to earlier ship dates via all coasts, potentially contributing to a
spike in volumes in advance of the expiration of the current union contract
between waterfront employers” and the International Longshore and Warehouse
Union, the ocean carriers’ group stated.
Pier 1 Imports is one example of a major shipper that’s making more use of the
Suez Canal. Although the transit time is a little longer from Asia to the U.S.
via the Suez Canal, the rates are lower than having to transit the Panama Canal
or rely on mini-landbridge to the East Coast. In addition, it makes sense for
many big retailers with distribution centers on the East Coast, like Pier 1,
which has DCs in Chicago and Columbus, to lock in favorable rates now, before
competition heats up or labor negotiations break down. An executive with
Virginia Port Authority (www.vaports.com) explains that big retailers can live
with the longer transit time (typically one week more) and can build it into
their supply chain schedules. Their chief concern is schedule reliability, not
fast transit time, he says.
The Georgia Ports Authority’s (www.gaports.com) director of trade development
concurs that the Suez Canal will continue to get more attention. He estimated
in a recent interview that over 350,000 TEUs from Southeast Asia, which are
currently moving through Hong Kong or Busan to the U.S., could eventually be
shipped through the Suez Canal to the East Coast. Further, he said that only
cargo originating in North China would eventually move through the Panama Canal
to the East Coast, and that cargo from Southeast Asia and maybe even South
China would move predominately through the Suez Canal.
“There just isn’t room canal-capacity-wise or ship-capacity-wise to take it
through the Panama Canal any more,” he remarked.
Meanwhile, the Port of Savannah has reached a new record for the number of
containers handled and total tonnage, reports Georgia Ports Authority. In fiscal
2007, the port handled 2.338 million TEUs, an increase of 14.5 percent over the
previous fiscal year. The Port of Brunswick also experienced significant gains,
particularly in bulk commodities. “We are on track to triple our container
capacity at the Port of Savannah and more than double the number of automobiles
handled at the Port of Brunswick due to ongoing expansion programs,” said
Stephen S. Green, chairman of the Georgia Ports Authority’s board of directors.
The Port of Savannah has become the second-busiest container port on the East
Coast and fourth in the U.S.
In August, APL (www.apl.com) launched its new weekly Suez Express service from
South Asia. The service boasts the industry’s fastest transit times from Asia
to the U.S. East Coast via the Suez Canal.
According to Bob Sappio, APL’s senior vice president, “As container volumes
grow and the transport system becomes overburdened, shippers are finding it
harder and harder to eliminate variability from their supply chains. The Suez
Express will replace variability with dependability.”
The service includes calls in Singapore; Colombo, Sri Lanka; New York-New
Jersey; Charleston; Savannah; Norfolk; Jebel Ali, UAE; and Port Kelang,
While increasing activity through the Suez Canal will continue to fuel growth
at East Coast seaports, the non-stop rise in U.S. imports coming through the
West Coast combined with all-water service to the East Coast means East Coast
seaports have plenty on their plates.
Last month, APM Terminals held a formal opening at its new $450 million
facility in Portsmouth, Virginia. The deep-water terminal will double cargo
handling capacity at Hampton Roads, which moved just over 2 million TEUs in
2006. It also has some of the most advanced technology of any port in the
U.S.-rail-mounted gantry cranes for stacking and unstacking containers that
will be entirely remote controlled.
The port claimed another milestone recently with Virginia International
Terminal’s switch to ultra-low-sulfur diesel fuel three years ahead of a
federal mandate requiring the use of the cleaner-burning fuel. The general
manager of Virginia International Terminals, a private terminal operating
company of the Virginia Port Authority, said he expected the benefits to
outweigh the costs, even though the fuel costs more per gallon.
Milestones are being reached elsewhere along the East Coast, including the Port
of Baltimore (http://www.mpa.state.md.us), which achieved a new high ($37
billion) last year for the total value of cargo moving through the port.
General cargo also set a new record at the port. Equally important, the Port of
Baltimore was one of the first U.S. ports to receive radiation equipment to
screen cargo containers, and this year, 100 percent of imported containers will
be checked for radioactive and nuclear materials before exiting the port.
The Port of Baltimore exemplifies the importance of exports to the U.S. economy
and to the vitality of East Coast seaports. Earlier this year, the Maryland
Port Administration received the Presidential “E” Award for excellence in
exporting for increasing its export business over the past several years.
“From 2002 through 2006, general cargo exported from the port’s public marine
terminals grew by 42 percent. Some specific export categories increased over
100 percent,” said Maryland Secretary of Transportation John D. Porcari.
Although softening trade volumes are being felt at the Port of Charleston
(www.port-of-charleston.com), officials there are gearing up for long-term
growth. Plans for a new 280-acre, 1.4 million TEU container terminal are moving
forward now that a state administrative law judge has dismissed an
environmental group’s challenge to the project. In addition, the port has hired
a sale representative in India to help develop more business for the port.
Already, the Port of Charleston’s trade with India has grown five-fold since
1999, making India the port’s third-largest trading partner.
“India is a major market for the Port of Charleston,” noted Bernard S.
Groseclose, Jr., president and CEO of the port. “Charleston enjoys a dominant
market share in this trade and our action to retain a sales representative in
India shows our commitment.”
Mediterranean Shipping Company (www.mscgva.ch), meanwhile, has chosen
Charleston as the site of its South Atlantic headquarters, which in addition to
Charleston will oversee MSC operations in Savannah and Jacksonville.
“MSC has grown exponentially in recent years and will continue to grow as we
add new generation mega-containerships,” said Sergio Fedelini, a vice president
with the world’s second-largest box carrier. “We looked at many locations, but
we couldn’t find any better alternative than the Charleston region.”
Without a doubt, the consensus among shippers and carriers is that while
there’s been some softening in the market along with shifts in trade patterns,
the time is now to prepare for overall growth in the market.
Three of the four members of the Grand Alliance-Hapag-Lloyd, NYK Line, and
OOCL-have launched two new all-water services to the East Coast by way of the
Panama Canal. Both routes originated in China and call the ports of New
York-New Jersey, Norfolk, and Savannah.
In Florida, the Port of Jacksonville (www.jaxport.com) has signed an agreement
with The Tower Group for construction on phase two of the new TraPac Container
Terminal at Dames Point. The second phase of construction is expected to begin
in October. The Tower Group is responsible for construction of 11 buildings at
the new terminal, including an administration building, maintenance and repair
facilities, a U.S. Customs examination station, entrance and exit structures
and labor facilities. The Tower Group will also pave the adjacent 17 acres
around the buildings and build TraPac Way, the facility’s entrance from New
Berlin Road. The terminal is scheduled to open some time next year with the
first call of a MOL vessel from Asia.
In addition, it was announced this summer that First Industrial Realty Trust
has acquired a 537-acre land site in Palm Beach County for an inland port. The
inland port is served by rail and will provide customers efficient access to
air- and seaports, Interstate 95, and the Florida Turnpike, especially with the
recently completed turnpike interchange for the Beeline Highway.
“The acquisition of this 537-acre parcel in Southern Florida, the largest land
acquisition in our company’s history, reflects our strategy to invest in
markets with growing populations and increasing supply chain needs from rising
international trade,” said Mike Brennan, president and CEO of First Industrial.
“The South Florida market is particularly attractive for industrial development
due to its growing economy, increasing port activity, high occupancy rates, and
excellent distribution workforce.”
The Ports of Miami, Everglades and Palm Beach are all projected to increase
cargo activity and the Port of Palm Beach will be undergoing an extensive
expansion program to address rising import and export volumes. In addition,
nearby highway expansion projects will facilitate even greater transport
flexibility to and from the park. wt