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U.S. ports urge congress to help
Shipping: Directors seek rail corridor fixes

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Published: 06/29/0912:35 am
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WASHINGTON – Struggling to ride out the recession, West Coast ports face new competition as ports in Canada and Mexico, an expanded Panama Canal and even the Suez Canal could steal away some of the cross-Pacific shipping they’ve relied on.

More than 70 percent of Asian goods imported into the U.S. – everything from toys to electronics to autos – pass through the ports of Los Angeles, Long Beach, Oakland, Seattle, Tacoma and Portland.

The directors of the ports, in a first-ever joint visit, were on Capitol Hill last week seeking billions of dollars and a federal commitment to improve rail corridors necessary to speed the goods east.

“We need a well-thought-out, strategic freight policy,” said Tim Farrell, executive director of the Port of Tacoma. “We need to focus on corridors from Shanghai to Chicago or Tokyo to Houston. We are just getting started, but the West Coast ports generate more jobs than the Big Three automakers.”

The looming clash over Asian shipping routes is part geography lesson, part the dreams of naval architects as they design ultra-large cargo ships, and part a short course in shipping economics – all of it overlaid with concerns about greenhouse gas emissions.

Canada is already developing a national shipping strategy utilizing the Port of Vancouver and a new port at Prince Rupert, 900 miles north of Vancouver. Prince Rupert is roughly a day closer to Shanghai by freighter, and the trains from there to Chicago and other Midwest cities encounter fewer bottlenecks than eastbound trains from the U.S. West Coast.

Mexico announced plans to build a mega-port at Punta Colonet on the Baja Peninsula and has expressed interest in Southwest markets. Two other Mexican ports, Manzanillo and Lazaro Cardenas, could also provide competition. The existing Mexican ports handle cargo mostly for domestic consumption. However, rail times from the Mexican ports to Houston would be shorter than those from U.S. West Coast ports to Houston.

Come 2014, a new set of locks in the Panama Canal will be completed, capable of handling containerships nearly double the size of those now using the canal. The large containerships could bypass West Coast ports entirely and head directly to the East Coast ports as Charleston, S.C., Norfolk, Va., and New Jersey-New York.

However, the biggest drawback to using the Panama Canal might be the fees it charges and the debt it needs to pay off for the new locks. Even now, those can range up to $250,000 for a large car carrier. Some shippers sail around Cape Horn at the tip of South America rather than pay the existing fees.

“The Panama Canal is not free,” said Paul Bingham, the managing director for global commerce and transportation at the forecasting and consulting firm IHS Global Insight.

Goods from countries west of Singapore, such as India and Bangladesh, often come through the Suez Canal on their way to the U.S. East Coast. Though the canal is at sea level and doesn’t have locks, tolls and fees for such things as pilots can run into the hundreds of thousands of dollars.

“In the very long term, all of these gateways will be needed,” said Paul Bingham, the managing director for global commerce and transportation at the forecasting and consulting firm IHS Global Insight. The key for West Coast ports will be improved rail service to the East, he said. “They have to be very proactive.”

At the heart of the congressional lobbying campaign by port directors was the reauthorization of the five-year Surface Transportation Act, which includes highways, roads, mass transit and the movement of freight. The current bill expires later this year.

The ports want the bill to include a greater emphasis on the freight rail corridors from the West Coast to markets to the east.

The funding would help augment improvements railroads are making already, including new track, upgraded signals and new or expanded yards.

Les Blumenthal: 202-383-0008

lblumenthal@mcclatchydc.com

 

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