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Surge in Asia's Exports
Brings Fresh Life to US Ports

by Robert Wright
Financial Times, January 4, 2006

On a clear winter day at the Port of Tacoma, the Pierce County Container Terminal is full of bustling activity. Towering green and white cranes load empty containers bound for Taiwan and mainland China onto the Hatsu Sigma, owned by Evergreen, the Taiwanese shipping line that has exclusive use of the terminal. Behind her, the Ever Unific is being unloaded after arriving from Japan.

Evergreen - which moved into the new terminal only months ago - is one of many shipping lines to have sharply increased traffic through the Puget Sound to Tacoma or nearby Seattle this year.

The once-minor ports have become important gateways for imports into the US from east Asia. The pair are benefiting, observers believe, from importers' nervousness about depending too heavily on a single route for manufactured goods from Asia.

Such fears have been particularly pronounced on the US west coast because the southern Californian ports of Los Angeles and Long Beach, which handle most of the US's Asian container imports, were the worst affected of many worldwide container ports to experience congestion last year.

Neither had enough equipment or workers to handle an unexpected surge in China's exports.

"People are looking for multiple pathways for all the cargo to be able to get through and to deal with unforeseen circumstances," says Michael Moore, vice-president of the Pacific Merchant Shipping Association, which represents shipping lines.

Seattle and Tacoma have won the business for several reasons. Unlike Oakland, near San Francisco, they are independent of the congested Californian rail system. They also have deep enough water - unlike Portland, Oregon - to serve the largest modern container ships. The route to the east coast via the Panama Canal - another popular alternative to southern California - is becoming more difficult as the canal nears capacity.

It is also quicker to reach the north-western ports from east Asia than more southerly ports, because of the routes ships take across the Pacific. For cargo going to Chicago and some other destinations, the advantage is enhanced by good rail connections.

At Tacoma, international container traffic increased 38 per cent in the first 10 months of last year over the same period in 2004. Seattle's international container traffic grew 26 per cent in the same period after also showing significant growth in 2004.

The north-west ports' smooth handling of growing traffic contributed to the near-elimination of congestion at US ports during last year's summer-to-autumn peak shipping season. Elsewhere in the world, similar shifts in traffic, efficiency improvements and the opening of new facilities had similar effects.

Shipping lines had failed for years to realise the north-western ports' potential, according to Neil Davidson, container ports analyst at London-based Drewry Shipping Consultants. "[This year] they were forced into doing it," he says.

Yet the growth could put strain on the region's port and rail capacity. Evergreen managers express frustration that on Fridays - Tacoma's busiest day - there are not always enough port workers for each container terminal.

Mic Dinsmore, chief executive of the Port of Seattle, says his port - which this year expects to handle around 2m 20-foot equivalent units (TEUs) of containers - will face capacity problems after it surpasses 3m TEUs annual throughput. "We're going to have a tremendous challenge to move that 3m containers up to the 4m mark," he says.

Timothy Farrell, executive director of the Port of Tacoma, says his port - which also expects to handle around 2m TEUs this year - has space to expand and could eventually reach an annual 11m TEU.

However, further work is needed on the port's already good rail connections."We are taking a look at the long-term system design, not only in the port but throughout the region," Mr Farrell says. Yet there will be little point investing if Seattle and Tacoma stop growing.

Many in the region believe this year's shift represents a long-term change in how the US handles its imports.

However, Robert Bohlman, president of the Marine Exchange of Puget Sound, which monitors shipping activity, is concerned that new container terminals being built on Canada's west coast could divert some of the traffic. Southern California's ports are also improving their terminals' efficiency and have introduced longer working hours, he points out.

Ominously, from a north-western point of view, the Port of Long Beach has grown strongly since it became clear there would be no repeat this year of last year's congestion.

"California got bit, they got bit bad," Mr Bohlman says. "They have taken some rather dramatic steps to change things."

Robert Wright, Transport Correspondent
Surge in Asia's Exports Brings Fresh Life to US Ports
Financial Times, January 5, 2006

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