No end in sight for US West Coast ports malaise

Blaming the “complacency of the inland transport providers”, the consultant claims that users of the US rail system have faced a dramatic reduction in the total size of the system, even though railroads have increased their investments in recent years.

“Faced with a tightening market and rising demand, the railroads have chosen to up their prices rather than invest in significant more capacity, in the mistaken belief that they had a captive market,” said Philip Damas, director of Drewry Supply Chain Advisors, a division of Drewry.

In an analysis of the end-to-end transport costs of containers shipped to and from US interior points via the West Coast and East or Gulf Coast, the consultant found that for many destinations in the eastern US, the route via the West Coast ports was now much more expensive than the route via East Coast and Gulf Coast ports.

Added to which, the expansion of the Panama Canal and the development of the Suez as a route for South East Asian cargo will “remove an infrastructure constraint and create more transit capacity for Asia/US all-water container ships”.

Sounding the death knell for US West Coast ports, the consultant added that the shift away from the West Coast was likely to “intensify in the decade to come”, particularly for intermodal cargoes to and from the eastern states of the US.

“Intermodal costs are certain to keep rising, while all-water costs will continue to fall, which means that the ‘land-bridge’ route will become less economic than the all-water route except for very time-sensitive goods,” Mr Damas commented.

The US Intermodal Today and Tomorrow White Paper can be downloaded at www.drewrysupplychains.com