As ships grew, dredging deepened harbours to turn USEC ports into Asian import cargo hubs
 The siphoning of transpacific cargo from west to east coast ports began in 2004 when the US east coast Port of Savannah decided there was an opportunity to exploit.
"Why not keep your cargo on the water and turn the ship into your warehouse," the Savannah, Georgia folk told American BCOs, who source cargo in Asia.
Usually, US-bound cargo lands on the west coast only to face a costly 2,600-mile journey across the badlands of America to the consumer-rich east coast where most of it is sold.
Of course, much has changed since then. Containerships have grown much larger from a day when the biggest was 14,000 TEU to today's mega ships of 24,000 TEU. And response to that has been the dredging of US east coast ports to accommodate bigger ships.
It turned out to be an easy sell for Savannah, as more and more shippers took the Panama route. And as good as the present looked, the future looked even better. That's because the "all-water route", as it came to be called, became a no-brainer as the Panama Canal was expanded, doubling its throughput making the cost per box even lower in 2016.
While there is nothing wrong with California as a consumer market - it's the size of Canada and much richer - that's all there was on the west coast. Oregon and Washington are sparse orchards as are most states west of the Mississippi, an area known to the affluent as "flyover country".
East of the Mississippi, however, east of Chicago and Dallas, has consumer-rich population densities that rival Europe's. So when the cargo arrives in Savannah, 20 miles from the sea, it’s a short truck or train ride to the point of sale, and not a costly 2,600-mile trek across the continent.
Rival east coast ports like Charleston, Virginia and Baltimore, even Houston, long a major oil port, was seeing advantage for itself in the Panama route and the drainage of west coast cargo to the east accelerated.
The explosion of exports from China in the first decade of the century was such that the major ports of Los Angeles and Long Beach suffered little, even enjoying tonnage increases.
In fact, there were plans to open up the west coast Mexican port of Lazaro Cardenas with a Kansas City Southern Railway link north to El Paso, Texas and Topeka, Kansas. But cargo losses were felt further up the US west coast in Seattle-Tacoma, Portend and Oakland where losses were keenly felt.
The all-water route became even more popular with news of the expansion of the canal's capacity, from being able to take 5,000-TEU ships would rise to 13,000 TEU. When it was only expected to transit 10,000-TEUers.
There was also an occasional shipment that went the other way. Instead of going east on the transpacific route to the US west coast ports, it instead went west via Suez. It was the long way round, but if there was no rush and BCOs found it convenient to make the ship their warehouse, it was often the cheapest way to go. In this way, they avoided heavier peak season surcharges that increased transpac freight rates subject to holiday and back-to-school seasonal peaks and troughs.
Of course, the Asia-US east coast via Suez was rarely used at first and only for cargo out of Singapore, Malaysia, Indonesia and points west as well as India and Bangladesh. But Asia-Europe was serviced by 10,000 to 20,000-TEU ships which had empty slots to fill and could afford to carry them more cheaply.
Unaffected, were west coast ports in Canada. Vancouver imports were 95 per cent Canada-bound, and Prince Rupert, 400 nautical miles farther north, had built a substantial niche market with northern Chinese imports being railed over a trouble-free Canadian National rail line to Chicago for Midwest dispersal.
Asia-Europe mega ships turned around in Europe, typically in northern range ports along the English Channel between Le Havre and Hamburg. This Asia-US east coast route necessitated the introduction of "wayports" with container handling technology from Jeddah in Saudi Arabia to Tangiers in Morocco, or in a half dozen other Mediterranean ports along the way. So cargo was taken off one ship, paused ashore before loaded into a smaller ship, bound for the North American east coast.
This solved two problems: Larger Asia-Europe ships, 10,000 to 20,000-TEUers back in the day, could not dock at east coast American ports and because harbours were too shallow and they had too little cargo for these ports anyway.
Dredging closed the gap. While it took Savannah's Georgia Ports Authority 13 years of litigation and environmental protests to achieve success, this was not the case with east coast rivals.
Much to Savannah's chagrin, rival ports went through the same process far more easily - largely because the environmentalists had been beaten in Savannah and could no longer use the same arguments to delay dredging as they had done before.
Also, with the new increased sizes, ships needed improved navigation channels on the east coast to enter and leave ports efficiently, quickly, and safely. However, few rivers or harbours are naturally deep, and required dredging.
After the initial excavation established a channel, periodic or "maintenance" dredging must be done to keep that channel clear and safe for navigation.
Without dredging, many harbours and ports would be impassable to cargo ships and passenger liners. Periodic maintenance dredging as well as occasional enlarging and deepening of navigation channels are essential.
Early on in American history, Congress passed the General Survey Act of 1824, which established the US Army Corps of Engineers' role as the federal water resource agency with the primary mission for constructing and maintaining a safe, reliable, and economically efficient navigation system.
Through dredging, channels are kept deep enough and wide enough for the safe movement of ships from deep ocean waters to the more than 200 deep-water harbours in the US, where imports are unloaded and exports are loaded.
Performed primarily by the Corps at navigation channels and by Port authorities at harbours, dredging takes place in five major areas, and the materials removed differ in consistency and placement options.
Except for continued maintenance, much of that has been done, and with rare exception US east coast ports can handle any ship that comes its way.
As is the case in so many developments, in shippings solutions to one pressing problem are superseded by phenomena wholly unrelated to the problem that transfixed attention in the past. One should look perhaps how regulatory authorities, rather than markets will shape future development. |
