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No Congestion in 2007, US Ports Tell Shippers by Patrick Burnson Cargonews Asia, April 23, 2007

Don't worry about cargo congestion this year at US West Coast ports, much less a return of the crunch that crippled the region in 2004. This was the assurance given to shippers at a recent conference organised by the Port of Long Beach at the convention centre.

"We forecast that the rate of growth in the economy may be down from last year, but there will still be new trade records set at US ports," said Paul

Bingham, a consultant with Global Insight. "The global economy is expected to grow by about four percent in 2007 and the US economy by about 2.3 percent the same year.

Bingham said there will no doubt be some choke points, but assured shippers that the region's supply chain community was on top of it.

Alison O'Donnell of the National Retail Federation agreed that current market indicators signalled a slowdown in trade for the first part of this year.

"The softening of the housing market is reflected in lower numbers for building materials and furniture sales, and mortgage problems may result in some consumers having less disposable income," she said. However, she said a strong rebound was in the offing in mid-July.

"Although retailers have become better at forecasting, consumers are hard to predict," she said. "For example, the same consumer driving a high-end luxury SUV may be shopping for household goods at a discount store."

O'Donnell said US retailers will continue to evaluate a number of sourcing options and US West Coast gateways. "Expect to see greater use of the ports in Seattle, Tacoma and Oakland," she said. "Shippers are also looking at ports in Canada and Mexico." All-water routes bypassing the West Coast entirely are also being considered, she added.

For truckers, the picture was slightly more clouded because of planned environmental rules. Brian Griley of Southern Counties Express, observed that his constituents were concerned about the approach the ports plan to take to replace the current trucking fleet over a five-year period with new, cleaner-burning vehicles. "Who will pay for it?" he asked. "We may not know the answer this year, but it will certainly be addressed in 2008."

On the rail front, Patrick Kinne, spokesman for BNSF Railroad, said his company would continue to invest in infrastructure and equipment. "We are also taking steps to achieve operating efficiencies in order to better utilise our existing assets," he said. "One way to do that is to move more units per train. In 2006, the railroad was able to move eight percent more shipments on two percent fewer trains."

Dockside labour relations have been stable so far, said Ed DeNike of SSA Terminals. He noted that the Pacific Maritime Association (PMA) has been mindful of avoiding mismanagement of the available labour pool. "The PMA certainly does not want to deal with the controversy we had three years ago when we had a melt-down," he said.

The PierPass programme of night and weekend gates has done much to relieve port congestion, although terminals continue to be under-utilised between 8 and 10 am and after 10 pm," said DeNike. "While the technology that has been implemented has been successful, the process has taken longer than expected.''

No congestion is expected this year at US West Coast ports but ocean carrier executives expect escalating peak season problems by 2010.

"American ports are rapidly running out of land and they will have to dramatically boost available space in order to keep moving larger amounts of cargo," explained Bill Rooney of Hanjin Shipping. "It's going to get a little too exciting around here in two or three years unless we solve this problem."