Backlash feared on US East Coast port spend
Unrealistic investment in deepening and expanding ports on the US East Coast could lead to a dramatic backlash, a leading economist has warned.
In a debate-style session to open TOC Europe’s Container Supply Chain conference, Hofstra University’s Jean-Paul Rodrigue told delegates that the massive public spending on dredging projects on the East Coast will come under close scrutiny when the anticipated increased volumes fail to materialise.
“Ports on the US East Coast are now dredging and expanding ports to get ship calls from larger ships,” said Prof Rodrigue. “But what you have got to realise is that the outcome will be virtually no growth or a zero-sum gain. So, we should expect some backlash from the Federal government.”
At its most extreme, that “backlash” could manifest itself in total bans on large ships entering US East Coast ports, he added. “We’re not there yet, but there may be a realisation that all of the dredging and expansions were for naught. Then ports could get screwed for all this wasted public spend.”
Fellow panellist Peter de Langen, principal consultant at Ports & Logistics Advisory and visiting professor at Copenhagen Business School, said policy makers that claim that bigger ships are being forced on them are misguided. “Ports and countries have a choice. If you choose to dredge and raise bridges you are not making a very smart choice. It is not an imposition, it’s a choice and it is silly to blame shipping lines for that choice.”
Prof Rodrigue added that the industry is reaching a phase of maturity for containerisation. However, the gap is growing between the reference and the reality. “As this grows wider and wider this leads to problems; there is no longer a relationship between growth of GDP and growth of teu; indeed, it was zero in 2016. Peak containerisation is a new term we have to adapt to.”
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