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U.S. Ports Stormed by Wave of Imports

by Ronald D. White, Los Angeles Times
Chicago Tribune, February 6, 2006

Cargo container traffic swells to record,
raising new concerns about congestion

Every major container seaport in North America handled more cargo in 2005 than ever before, as trade with Asia continued to swell and importers looked for alternatives to Southern California's crowded docks.

The growth was so brisk and spread so uniformly along the Pacific, Atlantic and Gulf Coasts that some observers are worried other regions will see the kind of congestion that brought the ports of Los Angeles and Long Beach, Calif., to a near standstill in 2004.

Despite the rapid growth in recent years of international trade, particularly with China and India, few expected the increases they saw in 2005.

"These cargo volumes are just beyond belief," said Aaron Ellis, spokesman for the American Association of Port Authorities, which has members throughout the Americas. "What is surfacing more and more is that our ports need to marshal as much of their resources as possible to handle the surges in cargo volume we've been seeing."

For more than 20 years, only three ports in North America--Los Angeles, Long Beach and the Port Authority of New York and New Jersey--handled 2 million or more cargo containers annually, as measured in 20-foot equivalents, the maritime industry standard for counting cargo boxes that vary in size.

The Port of Oakland joined them in 2004, and last year three more ports breached the mark or came within two ships' cargo of it: Tacoma, Wash., with 2.1 million; the Virginia Port Authority, with 1.98 million; and Charleston, S.C., with 1.98 million.

"It's simple. We are continuing to see record levels of cargo coming here from Asia, and that trend is going to continue into this year," said Steve Coleman, spokesman for the Port Authority of New York and New Jersey.

This nationwide boom is creating fears that ports aren't investing enough to process the heavier traffic and might develop the same sort of snarls that delayed imports through Southern California for up to two weeks via port, rail and truck in 2004.

Problems occur first along the West Coast, according to a Penn State University analysis of port capacity in 2005, "and then cause a domino effect as East and Gulf Coast ports see higher than expected volumes and subsequently experience their own capacity and service problems."

"The point is that there isn't enough excess capacity systemwide now--across all the ports--to handle any breakdown at any large port," said Michael Maloni, the report's author and a professor specializing in supply-chain management.

His study polled officials from 24 ports that handle about 84 percent of all container traffic in North America. The study concluded that most of the facilities were underestimating growth by as much as 7 million to 11 million containers during the next 10 to 15 years.

Ellis said that ports across North America are spending an average of more than $2 billion a year on new cranes and other cargo handling equipment, computers and software to keep up with the traffic.

Even so, seaport analyst Anne Van Praagh of Moody's Investors Service said, "We are still having trouble keeping pace with demand."

Importer Wen Chang found that out last year when he toyed with the idea of using Portland, Ore., or the San Francisco Bay area to bring in the custom wheels, auto and truck accessories and other products that his company, Trade Union International, manufactures in China.

Those ports were becoming nearly as busy as Southern California's, Chang discovered, plus he would face the additional cost of trucking his products to Montclair, Calif., where the company is based.

"That's not a solution," said Chang, whose 85-employee company averages between $45 million and $55 million in annual sales. "We really need to have our state and federal government face this and help find a solution, otherwise the flow of goods will be so backed up and inefficient, and everyone will become the victim."

Port officials say they're doing their best to keep ahead of demand.

"Ports across the country are not only expanding their facilities, they are building new terminals to be able to handle these greater volumes," said Ellis, the ports association spokesman. "That's become quite a trend around the country."

At the Port of Charleston, 25 percent of the volume comes from Asia and, increasingly, in the form of apparel from India and Bangladesh. In June, the port will get new cranes and other equipment that will allow containers to be stacked higher.

"We saw broad growth over the entire year. We're not at capacity, but we need to expand," said Byron Miller, spokesman for the South Carolina State Port Authority, which includes Charleston.

One of the most ambitious efforts is planned at Tacoma, where the port will spend $434 million over the next five years on capital improvements and expansion projects.

"One thing is clear about 2005 and the foreseeable future, and that is that international trade will continue to grow, and our transportation system must grow with it," said Timothy J. Farrell, the port's executive director.

Ronald D. White
U.S. Ports Stormed by Wave of Imports
Chicago Tribune, February 7, 2006

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