East Coast Shipping Surge May Become the Norm – Companies Increasingly Turning to Atlantic and Gulf Ports

KONICA MINOLTA DIGITAL CAMERA KONICA MINOLTA DIGITAL CAMERA

After experiencing months of slowdowns at West Coast ports due to ongoing labor negotiations in the last year, a number of companies have officially switched shipping routes and turned to the East Coast to deliver and unload their products.

East Coast port traffic has increased 15% so far this year, and West Coast ports have lost 4% of traffic, according to a recent report from US import and export data company Zepol. The changes are due to a “hefty chunk” of businesses switching to Atlantic and Gulf ports in 2015, even before the expansion of the Panama Canal is fully complete, the research firm reported.

The Port of Savannah saw traffic increase 32% during the first half of 2015, the highest jump among the East Coast and Gulf ports. Houston port traffic rose 26% and traffic at the Port of New York and New Jersey increased 12%.

Chinese Companies Lead East Coast Shift

Zepol also reported the majority of companies that changed their shipments to East Coast ports are Chinese firms. Chinese imports at West Coast ports have fallen 3% so far in 2015, while they have grown 20% at ports along the Atlantic Ocean and 43% at Gulf ports. The port of Houston, specifically, saw a jump of 53% on imports from China in the first half of the year.

Dollar Tree announced this month is would build a $104.4 million distribution center in South Carolina, not far from the South Carolina Inland Port in Greer. The company said the facility could help lower supply chain costs by $300 million a year and avoid plagued shipping routes heading to West Coast ports.

Panama Canal Expansion

Once the Panama Canal construction is complete next year, more businesses are expected to shift their shipping routes as well, research by the Boston Consulting Group and C.H. Robinson showed. The research points to East Asian, US-bound container traffic rising 10% or more following completion of the Panama Canal project. Currently, the East Coast receives about 35% of the share of US-bound container traffic coming from East Asia. However, that share could grow to 50% by 2020.

Yet the main reason for this growth is not the woes on the West Coast port but the increased  routing options shippers will have to send their goods to the US following the Panama Canal expansion, and so carrier competition will rise.

Some Good News for West Coast Ports

While operations may not be what they used to at West Coast ports, some companies do not view the situation as dire as they did last year. In 2014, certain cargo owners were already sending holiday season shipments in July due to labor disruptions along the West Coast ports, which were expected to slow operations. However, cargo owners do not plan to send holiday shipments until August or September this year. Some fashion companies may even wait until October.

Jonathan Gold, vice president for supply chain and customs policy of the National Retail Federation, told The Journal of Commerce some shippers that turned to East Coast ports last year may be resuming business with West Coast ports as well.

One example is CaroTrans, a non-vessel operating common carrier and ocean freight consolidator, which resumed its weekly direct importing service straight from the Netherlands to the Los Angeles port this month. CaroTrans CEO Greg Howard told GlobalTrade the congestion at the West Coast ports had eased, allowing the company to resume “reliable” 26-day shipping service to the LA port, where service was back at “stable conditions.”

Discuss this:

Your email address will not be published. Required fields are marked *