Crisis may impact shipping industry

November 17, 2008 7:10:44 PM PST
The current economic downturn is bad enough, but it could get even worse for West Coast ports. Improvements to the Suez and Panama Canals, coupled with our shrinking rail system could change the way goods get from Asia to the East Coast.

West Coast ports have long been the preferred route for goods headed to interior U.S. destinations via the rail system and trucks. But industry analysts say for many Eastern destinations, that route is now much more expensive than East Coast or Gulf Coast ports.

The U.S. rail system has shrunk and at the same time, increased prices sea freight is more fuel efficient per ton than rail and West Coast freeways are congested.

Mike Jacob is Vice President of the Pacific Merchant Shipping Association. He says the Western ports are lagging.

"Texas, Florida and Virginia are making strong strategic investments not just in seaports, but also in dedicated freight ways for trucks and for rail," said Jacob.

Between January and October, Port of Oakland imports were down 6.4 percent as compared with the same time last year, while exports were up 4.4 percent.

The port says that reflects the current economy, not a permanent shift in trade routes, though there is concern over the railroads.

"There's been a lot of talk with our local providers about what can we do to improve that intermodal access and movement of goods," said Port of Oakland spokesperson Marilyn Sandifur.

Industry analysts say improvements to the Suez Canal and the widening of the Panama Canal will also make the Eastern ports more attractive.

Jacob says shipping companies like those in his association spend $2 billion a year on West Coast rent, leases and wages.

"Some of the predictions are as dire as 25 percent losses in business over the long term. That's a pretty sizable hit on our economy," said Jacob.

But the Port of Oakland says predictions for trade swinging away from west coast ports are unfounded.

"I don't think anybody has a crystal ball and can say exactly which way things are pointing," said Sandifur.

There may only be predictions, but the Association of American Port Authorities is worried enough about it to be hosting a two-day conference on the topic next year in Florida.


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