“Port congestion” is today’s buzz phrase in the maritime community. Every trade journal seems to ponder the problem. But why are we so concerned, and what should we do about it?
Ports compete in a wide-open marketplace. Shippers can choose from a range of logistics paths, responding to customer needs by shifting vessel patterns between competing ports in a given market range. However, most port market ranges are not subject to any overall strategic capacity planning. U.S. ports are free to make expansion decisions without considering what other ports might be doing, and ports in competing countries within the same range also act independently. This competition should make for efficient freight movement because it allows shippers to find the cheapest, most effective shipping path. Right? Well, maybe.
It takes a long time to build new capacity. Open land next to deep water is no longer plentiful. Building deepwater landfills is expensive and time-consuming. Environmental permitting is getting more complicated, expensive, and restrictive. And meanwhile, the ‘natives’ are getting restless.
Most ports are in busy urban areas, but much of the freight is destined for distant inland markets, which means port city residents unfairly carry the environmental burden. In many cities, residents are responding by applying political pressure to restrict port traffic increases, despite the contribution such traffic makes to their local economy. The environmental headaches are perceived as outweighing the economic benefits.
The restrictions on port development mean that rapid shifts of freight between ports in a given market range can cause chaos. In 2004, there were tremendous port congestion problems in Southern California, due largely to an imbalance in growth across the West Coast ports.
This year has seen a rapid rebalancing of trans-Pacific loads across the West Coast, Gulf Coast, and even East Coast ports. This is good in the short term, but the ports involved must be careful: Shifting just 5 per cent of Southern California’s traffic to another port can increase that port’s traffic by as much as a third. How many ports could handle that onslaught of volume?
Port capacity is all about velocity: The faster freight moves, the more a port can handle through its fixed resource base. By making better use of existing facilities, ports can defer time-consuming and difficult new developments. But what does that mean in practical terms?
Velocity is simply distance over time. At sea, container freight moves at 25 knots. Sailing 6,300 nautical miles from Hong Kong to Los Angeles consumes 11–12 days, but it may take three days to empty the ship. Then, the containers usually loiter in the terminal for five more days. It takes another day to traverse the L.A. area, which is about 50 miles across. Thus the average velocity of the freight drops to about 0.25 knots. All the wonderful technology built into maritime transport is stymied by the port system’s inability to get the freight inland efficiently.
While that container is inching along, it consumes valuable port and urban resources: berths, terminal yards, urban roads, and regional highways. To reduce that consumption, we must increase speed systemwide. We cannot just attack one element at a time – that will only shift the congestion down the line. We must attack the velocity problem at all points simultaneously, so that each element of the transport chain can take up the strain as neighboring links are improved.
U.S. ports are starting to take a more systematic approach to velocity improvement. The Port Authority of New York and New Jersey just completed a comprehensive port improvement plan. The Port of Oakland recently completed a multimodal maritime development alternatives study, coordinated by JWD Group. The Port of Los Angeles is coordinating improvements across all transport links. West Coast operators are working to increase container velocity inside and outside their terminals. But what sorts of improvements are contemplated?
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