Coastal modal shift for Asian cargo from the west coast to the east coast has benefits for all
 The prospect of a US west coast dock strike is generally dreaded, but like global warming and CO2 emissions, there are pluses that are seldom acknowledged and rarely discussed.
When unskilled and semi-skilled dockers are paid as much a FBI agents with law degrees and hospital residents with medical degrees, one may fairly ask whether this makes sense, just as one might look at the plus side to global warming. That is how CO2 emissions encourage plant life, and have been credited with the greening of arid areas of the world.
Canadians and Russians might well have reason to welcome global warming as it would transform much of their useless moose pasture into productive arable land.
Looked at that way, breaking the strangle hold unions have on waterfront jobs on both the east and west coast would open the trade to boundless innovation and allow those willing to work for wages commensurate with those paid to the unskilled and semi-skilled elsewhere. Or perhaps return to a degree of normalisation, whereby the employer chooses the employee he wishes to hire rather than having that right conferred to the employee's union.
There would be winners and losers in the event of a prolonged strike on the west coast of the United States. The contract talks cover more than 22,000 dockers at 29 ports from California to Washington state.
The ILWU (International Longshore and Warehouse Union) has gone on strike before, which resulted in the west coast ports being closed for 10 days, disrupting trade and costing Southern California’s economy an some US$8 billion.
But it is an ill wind that blows no one good. And there are winners and losers if such a strike were to occur. The first to benefit, and deliberately so, was the Port of Savannah of the Georgia Port Authority. It made a pitch to Asian shippers to stop relying on west coast ports when so much of their cargo was headed for destinations far closer to east coast ports.
Ever since 2006, Savannah - then Charleston, Norfolk, Baltimore - have been syphoning off west coast cargo from Los Angeles and Long Beach, though with more devastating effect in Oakland, Portland, Tacoma and Seattle. Cargo was lured away to east coast ports when shippers were urged to "keep it on the water" and/or "make the ship your warehouse".
And that was before the Panama Canal expansion intruded as the big game changer that stands to lead to the demise of the west coast's role as Asia's gateway to America. The west coast would, of course, retain its status as gateway to western North America. That's respectable enough, but it not the same as having the only way Asian exports can enter the US. That has been the way the world viewed the west coasat, but less and less so in the last 15 years.
So what one must consider are the strategic factors involved in the lowering stevedoring costs. The big one is the fact that most consumer spending in North America is done east of the Mississippi. Even in Canada it amounts to the same thing. There isn't much shopping west of Lake Michigan until one gets to Vancouver. So it is in this consumer-rich eastern zone that population density takes on characteristics of western Europe's retail zone known as the "Blue Banana".
The second big factor is the 2016 expansion of the Panama Canal. The Port of Savannah found enough financial wiggle room to pitch the profitable use of the Panama to Asian shippers with their "keep it on the water" argument. Even though, the biggest box ship that could transit the canal was 4,500-TEU (today's biggest are 24.000+TEU and the average comes in at 10,000 TEU). But after 2016, the expanded canal could transit 13,000-TEUers.
Much to Savannah's chagrin, after experiencing 13 years of torturous litigation from obstructionist environmentalists before they could dredge so bigger ships could access the port, rival ports of Charleston, Norfolk and Baltimore. just surfed into to dredging permits without objection, getting Obama's TIGER (Transportation Investment Generating Economic Recovery) grants to speed them along the way. And now that bigger ships were pulsing through the Panama, Gulf Coast ports were reaping the benefit too as there is a consumer-rich Gulf Coast zone to serve from Houston to Tampa.
Except for west coast destined cargo, there are a lot of reasons to avoid the west coast. Asian cargo is also going the other way around, that is using the Suez Canal. US east coast cargo can be dropped off at "wayports", such a Jeddah, Port Said, Damietta, Tangiers and Algeciras where it is picked up again for US east coast ports as well as Canadian destinations like Halifax and Montreal.
It's not much of a stretch to say that shipping has changed in the last 10, 15 years more than it has in the previous 40.
Forty years ago, what little container trade there was almost entirely transatlantic. Sealand opened it up on the Pacific by supplying the American Expeditionary Force in Vietnam. The Japanese,. looming as the economic power house building super tankers to go around Africa, because of the decade-long closure of the Suez Canal because of Arab Israeli wars, jumped into the container game, as the Asian Tigers become the envy of the world, And then Deng Xiaoping's China became the global factor that changed the world.
Containerships doubled in size to 1,000 TEU, then more than doubled to 5,000 TEU. By 2006, the biggest was the Emma Maersk at 14,000 TEU. These were huge changes and implications of these changes were larger still.
Lurking in the maelstrom of change that swirls about us is the opportunity to take advantage of ill winds that can blow some good if properly harnessed. Having shipping benefit from a natural coastal modal shift from west coast to east is no bad thing and if taken in hand, and a good thing for the world as a whole. |
