East Coast Option

The time is rapidly coming when US importers need to decide their strategy for the Thanksgiving/Christmas shipping peak which normally comes in late August through October. With last years’ port congestion, rail shortages and natural weather disruptions in mind, importers are faced with the choice of East Coast vs. West Coast.

The first problem to overcome is to decide on the distribution centres that will be used to repack and disperse the goods. The population centres are a major driving force here, with Southern California, Chicago, the Southeast, and greater New York being the largest, ” but there are growing centres around Houston and Memphis too.

Importers are less than sanguine about being restricted to the West Coast and continue to build up their direct shipments to the East Coast. By 2004 the major East Coast ports saw the Asian market share of their throughputs rise to 50% and higher, primarily as a result of direct, all-water services via the Panama Canal. This despite the fact that transit times were six to eight days longer, and more if the vessel stopped at LA/LB then MiniLandbridged containers destination.

The Port Authority of New York/New Jersey recently reported that they expect to see three or four new services via Suez before year end with originating points in China, indicating that carriers are getting fed up with Panama and the fact that it is maxing out. Furthermore, the additional time via Suez to New York, at average speeds of 22-24 knots, is two days or less for Hong Kong and 4 days or less from Shanghai, i. e. highly competitive with the Panama option.

With US transpacific trade growth rates expected to top 12% this year (Global Insight) the importers can be expected to continue to hedge their bets and increasingly support the East Coast.

Hopefully they will let the carriers know in good time, otherwise planning goes out the window – again.