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Focus: Global Supply Chain and Logistics

Our Weekly Feature Article on Topics Related to Global Supply Chain & Logistics
 

From SCDigest's On-Target e-Magazine

- Jan. 4, 2016 -

 

Supply Chain News: US Gets First Stop Ever from New Generation of Megaships, but Ports are Far from Ready for Regular Service


Giant CMA CGM Ship Visits Port of Los Angeles, Heads to Oakland, but Major Systemic Changes Needed, Drewry Says

SCDigest Editorial Staff

 

Perhaps missed by many during the last week of 2015, the first of the latest generation of 18,000 TEU+ container ships made a visit to a North American port. France's CMA CGM's 1300-foot long Benjamin Franklin vessel was unloaded at the port of Los Angeles after arriving from loading stops on its maiden voyage from China and South Korea, before heading north to the port of Oakland from there.

The Benjamin Franklin can handle about 18,000 TEU.

SCDigest Says:

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Industry experts foresee five or six load centers developing at U.S. ports - two on the West Coast, one on the Gulf Coast, and two or three on the East Coast.

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Until now, that class of container ship (called ultra-large container vessels or ULCVs), which promises much lower cost per container than the previous generation of 12,000 to 13,000 TEU ships, had not been put in service into North American ports, being reserved primarily for Asia to European routes. Most North American ports are not deep enough to handle vessels of this size, and there have also been concerns about whether container handling productivity was strong enough in US terminals to unload these new giants effectively.

In the first half of 2015, for example, the ports of LA and Long Beach were both hit with huge delays in container movements, the result in part from the effects of a labor slow down during contract negotiations with West Coast Longshoremen, but also due to the impact of even the previous generation of megaships that call there and which created major unloading challenges.

The ports of both Los Angeles and Long Beach are in the midst of expensive projects to deepen channels and expand terminals to adapt to this changing world of container shipping.

Jock O'Connell, an international trade economist, told the Los Angeles Times last week that the arrival of the Benjamin Franklin is a sign that at least one shipping line is satisfied with the ability of West Coast ports to handle the increased cargo loads. He said the San Pedro Bay ports are now moving cargo more efficiently and are better at handling larger ships than they had in the past.

"It's a vote of confidence in West Coast ports," O'Connell said.

That said, it is not yet clear whether this first stop was just a trial-run or not, although CMA CGM's forward schedules do show that the same ship will return to the US West coast in mid-February and make a stop Long Beach.

And the maritime analysts at Drewry were a bit more cynical about this first ULCV to arrive at a US port.

"In truth, the arrival of one 18,000 TEU ship, which may not even be full, won't meaningfully test the West Coast terminals' ability to deal with such ships, but at the very least it raises the question of what the USWC ports need to do to get there," Drewry wrote in its weekly blog.

"Forgetting the recent labor issues, West Coast ports have shown they can accommodate a growing number of ships in the 8,000-14,000 TEU range, but there remain a lot of unanswered questions as to when the West Coast ports will be in a position to step up to the next level and handle megaships such as CMA CGM Benjamin Franklin," Drewry continued.

It adds that West Coast ports will have make major improvements in terms of water depth, quay length, and cranes, as well as improve the efficiency of how cargo is brought to and from the port complex via truckers (who are in short supply) and intermodal rail.


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Terminal automation would certainly help to improve productivity, as would longer working hours to turn ports into 24/7 operations, but "this would require more flexibility from the unionized Dockers, something that seems a long way off," Drewry notes.

As a point of reference, it took about 1,500 Longshoremen 56 hours to move nearly 11,230 containers on and off the Benjamin Franklin, the Port of Los Angeles said.

Across the board, North American ports are certainly spending money. The Port of Los Angeles is undergoing a $510 million project to expand its cargo-handling capacity at the TraPac terminal. Next door, two Long Beach port terminals are in the midst of a $1.3 billion expansion that will create one of the country's most automated docks. A separate $1.3 billion plan in Long Beach will replace the Gerald Desmond Bridge, which is too low for the megaships expected to arrive in the next five years.

The Port of Oakland and ports of Seattle and Tacoma also have terminals large enough to accommodate megaships. The Prince Rupert port in British Columbia, Canada, is on track to handle such vessels by 2017, followed by the Port of Vancouver early next decade.

On the US East Coast, port operators are similarly racing to modernize. The Georgia Ports Authority, which owns the Port of Savannah, is spending about $1.5 billion in the next decade to improve crane operations, storage facilities and other infrastructure. The state of Georgia is spending $120 million more to improve roads near the port this year. In New York and New Jersey, the joint port authority is carrying out a more than $1 billion plan to raise the Bayonne Bridge connecting Staten Island and New Jersey to allow for taller vessels.

Meanwhile, the Port of Charleston has received the go-ahead from the US Army Corps of Engineers to begin dredging its waters to a depth of 52 feet in a $521 million project aiming for a 2019 completion.

As US ports add capabilities to handle the new generation ships, it puts smaller ports, such as those in Jacksonville or Mobile, in danger of losing relevance in the new megaship era.

Industry experts foresee five or six load centers developing at U.S. ports - two on the West Coast, one on the Gulf Coast, and two or three on the East Coast. These ports will be the ones that have the water depth, bridge clearance and terminal capacity to handle the behemoths - and the efficiency to get them in and out of port in less than two days.

It should be noted, however, that even with the expanded Panama Canal, expected to open sometime in 2016, the passageway will only be able to handle ships in the 13,000 TEU range.

How do you see the megaships impacting US ports? Let us know your thoughts at the Feedback button (email) or section (web form) below.



 

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