moved by rail to the center. There, they would be loaded
aboard containerships or dry bulk vessels for trips to Asia.
The first step was announced in late January, when
the port and Union Pacific Railroad Co. (UP), the giant
Western railroad, began a $25 million initiative to link the
new site with UP’s main line into Oakland. The work, set
for completion in October, calls for the construction of
7,400 feet of lead track and the reconfiguration of adjacent
track. When finished, the project will better position the
port to receive bulk shipments from both UP and BNSF
Railway, its rival in the West. The port and the state’s
“Trade Corridors Improvement Fund” will finance the
work.
Lytle didn’t mince words when describing the logistics center’s impact on his facility. “This is the future of
Oakland,” he said.
STAYING RELEVANT
From Seattle to San Diego, the 29 ports covered by the new
five-year labor agreement are clearing backlogs and trying
to stanch the bleeding as importers that shifted deliveries to
the East Coast (via the Suez and Panama canals), to Canada,
and to Mexico debate whether to bring them back west. On
that score, opinion is mixed. Ben Hackett, who heads a
consultancy bearing his name, believes most diverted cargo
will return because West Coast ports, especially Los Angeles
and Long Beach, remain the most cost-effective way to get
imports to U.S. end markets. Kumar Venkataraman, a part-
ner in the retail practice of consultancy A. T. Kearney, sees
a two-tier market evolving with big beneficial cargo owners
(BCOs) having the scale and sophisticated technology to
implement a diversified U.S. distribution strategy utilizing
multiple ports, while smaller BCOs lacking those capabil-
ities either return to the West Coast or, having never left,
simply stay put.
An industry insider, speaking on condition of anonymity,
said West Coast ports will suffer as importers who had long
thought about moving away from the West are now pushed
to act. “Until now, the logistics guys couldn’t convince their
leadership to move because there was no event to prompt it.
All they were looking for was a reason. Now they have one,”
the executive said.
Larry Gross, a senior consultant at consultancy FTR
Associates, wrote in late February that for big BCOs with
multiport strategies already in place, a further shift from
the West “is more a matter of turning the dials than building something from scratch.” Noting that neither labor
nor management seemed to publicly show remorse for the
damage inflicted on shippers, intermediaries, consignees,
and vessel operators, Gross said the warring parties will
“end up paying dearly for having ignored the needs of the
shipper who truly pays their bills.”
SECULAR PROBLEMS
Though the agreement averts the immediate crisis, it does
nothing to address the afflictions that plagued the U.S.
goods-moving system long before the standoff began. Port
congestion at dock and landside remains a critical concern.
Ever-larger ships are expected to hit the water in the next
two to three years; about 60 percent of the global ship
order book is composed of vessels of 10,000 twenty-foot
equivalent (TEU) container units, according to research
firm Alphaliner.
Because operators of the large vessels must minimize
berth times in order to justify the huge investment in them,
the ships are likely to call at fewer ports, analysts said. This
means more tonnage to be handled by a smaller cluster of
ports already straining under the current load.
An imbalance of truck chassis, and the amount of time
truckers spend picking up and returning the equipment,
added significantly to the backlog, especially at Los Angeles
and Long Beach. On March 1, a long-awaited chassis
provisioning model began at the ports that is designed to
enable the free exchange of more than 80,000 units across
