US ports continue to face problems affecting their ability to compete with international rivals that have seen continued growth and are expanding faster than US facilities, according to a new report from the Federal Maritime Commission.
The report, an update on the commission’s 2012 Study of US Inland Containerised Cargo Moving through Canadian and Mexican Seaports, found that Prince Rupert in Canada was North America’s fastest growing port, expanding at 13.8% year on year, followed by Manzanillo in Mexico, which grew by 11.2%.
“Larger ships, new alliances, labour disputes, and equipment and trucking shortages have contributed to the already building congestion at US ports, with the most severe effects felt on the west coast,” the FMC said. “As a result, shippers have been diverting cargo to different routes and ports to lessen delays.”
North American container trade grew at 2.5% in 2014 to 39.9m teu, of which US ports took the lion’s share at 31.6m teu, or 79% of total trade.
But while US ports took the lead, Mexican ports grew the fastest during 2014, at 3.5%, compared with only 2.6% in the US.
It was not the major west coast ports that provided US growth, the fastest growing after Prince Rupert and Manzanillo were the east coast ports of Boston, South Carolina and New Orleans.
The 2012 study identified Prince Rupert as a major threat to US ports due to its location – 68 hours closer to Shanghai than Los Angeles – and its deep water channels and efficient rail networks. In the three years since then it has become a major competitor, according to the FMC.
As much as 61% of cargo imported to Prince Rupert has a final destination somewhere in the US, the report said. Of the 360,000 teu handled there, some 220,000 was transhipped south of the border.
While DP World is planning further developments at Prince Rupert, the other major threat is Vancouver’s Port Metro, Canada’s largest port, with 28 major cargo terminals and three main rail connections.
South of the border the competition threat is not as strong, according to the FMC, as Mexico suffers the geographical disadvantage of being four to five more days sailing from Shanghai than Los Angeles. Moreover, the distance from Lazaro Cardenas to Chicago is more than 200 miles further than from Los Angeles to Chicago.
Nevertheless, rail operators are trying to tempt shippers to use Mexican ports, and are promoting the benefits of Mexico’s membership of the North American Free Trade Agreement, as well as its low labour costs.
Mexico is investing $5bn in port projects and major importers such as Costco are reportedly shifting from importing goods through Los Angeles-Long Beach to utilising Laredo in Texas by using Lazaro Cardenas as its inbound port.
Factors pushing cargoes away from US ports, particularly on the west coast, include congestion and labour disputes that arose last year and lasted into the first half of 2015, according to the FMC.
“Congestion has prompted many shippers to seek alternate routes for future cargo, leading to cargo not only being diverted to the east coast but to Canadian and Mexican ports. Many shippers fear future labour disruptions, prompting them to move their cargo to other ports as they are willing to pay more for greater predictability.”
Moreover, the Panama Canal expansion, scheduled to open in 2016, may lead to more cargo bypassing west coast ports in favour of an all-water route to the east coast.
“For the first time in recent decades, east coast ports handled more laden containers than west coast ports in the first three months of 2015,” the FMC said. “Atlantic ports’ market share in the first quarter was about 48%, while west coast ports’  share dropped to around 44% and the Gulf coast increased market share to about 8%. This trend has continued well into the first half of this year.”