In International Shipping News 28/04/2015
The recent congestion problems at US West Coast ports have captivated observers of the liner industry, and many others. At times during February and March the containership capacity delayed outside the five largest US West Coast ports reached over 0.2m TEU. These delays have led to a number of cargo diversions away from the West Coast, and a wider impact on the boxship sector.
For Want Of A Berth
Increasing boxship delays outside US West Coast ports were reported from late 2014. Data indicates that in mid-February 33 boxships of around 0.22m TEU
were at anchor outside the top five US West Coast ports of Los Angeles, Long Beach, Oakland, Seattle and Tacoma. This was equivalent to 1.2% of the containership fleet as of the start of February. The majority of these delays occurred outside the LA-Long Beach port complex, where some vessels were reportedly at anchor for up to 14 days. Largely as a result of this congestion, throughput at the major West Coast ports contracted in early 2015, falling by 19% y-o-y in the first two months (see inset graph).
Handling The Boxes
The expiry in June 2014 of labour contracts for longshoremen of the ILWU was a key reason behind the delays on the US West Coast. The Pacific Maritime Association (PMA), responsible for negotiating new contracts with the ILWU, blamed the union for labour slowdowns and shortages during a nine month period in which no agreement was reached. US ports were subject to rising cargo pressure in 2014, partly as a result of robust growth of around 6% on the eastbound Transpacific trade. Moreover, the ports were also handling larger boxships in 2014; the average size of vessel deployed on the Transpacific route had risen 12% y-o-y by start April 2015, to 6,038 TEU, as larger vessels have been used by the leading operators on the trade. These factors led to a rising, spiky flow of box volumes into US ports, exerting increasing pressures upon port facilities.
Congestion Easing?
Delays eased once a tentative agreement was reached between the PMA and ILWU at the end of February. On the US West Coast, boxship capacity was only understood to be at anchor outside LA-Long Beach by early April, albeit still over 70,000 TEU. However, there have been signs of strain on the US East Coast, with throughput growing 10% y-o-y at the top five US East Coast ports in January, partly in response to cargo diversions from the West Coast. Both NY-New Jersey and Virginia were reportedly operating with delays and cargo backlogs in early April, as bottlenecks moved location.
Further Delays Ahead?
So, though congestion now looks to have eased on the US West Coast, there have been reports of delays elsewhere. The increased operation of very large containerships is set to increase the pressures on container terminals. Combined with concerns that port capacity has been an under-invested part of the sector in recent years, it means that congestion issues may well pop up around the globe on a more regular basis going forward. Given the ability of such problems in the system to soak up substantial capacity, this could have a wider, supportive impact on the box shipping markets.
