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physical obsolescence. And it’s not as if U.S. importers are
going to shift their buying away from Asia.
As it stands, importers will likely face the inconvenience
of delivery delays of six to 12 weeks while the current backlogs are cleared. This will result in lost business and higher
delivery costs, but minor lasting damage.
NO RESOLUTION IN SIGHT
For U.S. exporters, though, the situation couldn’t be
more different. Agriculture accounts for a large share of
U.S. exports to Asia. Much of that volume is made up of
perishable foodstuffs. Foreign buyers have supply sources
outside the U.S. and would not hesitate to use them if U.S.
delivery schedules are compromised. There are no other
viable ports outside the U.S. that have capacity adequate to
accommodate a massive diversion of exports. Vancouver’s
Port of Prince Rupert—geographically the closest North
American gateway to Asia—today handles about 400,000
twenty-foot equivalent units a year, according to Hackett
Associates. By contrast, the Los Angeles/Long Beach port
complex handles about 8 million total TEUs a year. “U.S.
exporters are pretty much stuck with the ports they have,”
Hackett said.
Adding to the problem is the chronic lack of access to
empty containers to ship Midwest agricultural exports
from sparsely populated origin points to the ports via rail
or truck. Containers entering U.S. commerce are typically
bound for densely populated regions, and vessel operators
that have a billion dollars or so invested in the equipment
want them to remain there. This makes life tough for grow-ers whose products are in parts of the country where land is
abundant but consumers may not be.
For example, Minneapolis, the closest large metro area to
many Upper Midwest grain suppliers, has the most acute
shortage of 20- and 40-foot containers out of 19 markets
analyzed by infrastructure design consultancy Moffatt
& Nichol from data provided by the U.S. Agriculture
Department.
Walter Kemmsies, who as an economist with Moffatt &
Nichol has raised concerns for several years about equip-
ment imbalances, is not encouraged about the current
trend’s direction. When asked at the SMC3 annual confer-
ence in January if anything had changed, he said, “Export
containers are even tougher to find, and it’s more expen-
sive to procure and ship them if you can.”
Kemmsies said the contract battle should serve as a
wake-up call to “reset” a flawed infrastructure that has
undermined export flows and, by extension, American
competitiveness in world markets. The key, he said, is to
fully embrace the idea of a seamless multimodal network
and to bring it to fruition.
“Intermodalism is the essence of freight movement. ... It’s
time to resurrect the [U.S. Department of Transportation’s]
Office of Intermodalism and tie infrastructure investment
to economic objectives again,” Kemmsies said.
12 marine terminals and a network of rail yards, container
yards, and other locations in the sprawling complex.
In an ideal world, technology will be optimized at port
facilities to ramp up productivity and to expedite the
import loading and unloading process. But the world is
not ideal. The 2002 and 2008 contracts introduced automated processes to improve productivity. However, a
management source said in late February that the 2015
contract, whose details were unavailable at press time, did
not include further automation advancements as part of
agreed-to work rule changes. That will surely disappoint
those who believe technology at West Coast ports badly
lags behind that used in Asia and Europe.
“West Coast U.S. ports have become over the past decade
the least productive, most prone to labor disruption, most
expensive, least automated ports in the developed world,”
Peter Friedmann, executive director of the Agriculture
Transportation Coalition, a group representing agricultural and forest products exporters, said in early January.
For all their hand wringing, importers could have fared
far worse. The impasse occurred after the pre-holiday shipping season. Sensing trouble, many importers had moved
their goods into U.S. commerce over the summer to ensure
their availability during the holidays. In addition, most
import commodities are dry goods that aren’t prone to
