Pacific Maritime Magazine - Marine Business for the Operations Sector

Ports of the Pacific

 

May 1, 2017

The Port of Portland, Oregon has been seeing an increase in domestically-built cars for export, such as this Honda built in one of 12 Honda plants in the US. Photo courtesy of the Port of Portland.

Over the past several years, much ado has been made about how the expansion of the Panama Canal affects business at the two largest seaports on the US West Coast – those in the Southern California cities of Los Angeles and Long Beach.

And for good reason: in the 11 months since it debuted, the expansion of the Panama Canal has resulted in record numbers of vessels passing through. Month after month since last winter, the Canal has set new tonnage records, including 1.16 million Panama Canal tons in January and 1.18 million tons in February.

Since the new locks were inaugurated in June 2016, about 1,100 neo-Panamax vessels have transited the new locks, and more than 53 percent of containerized cargo transiting the waterway is using the expanded canal.

In addition, about a dozen new liner services have been re-routed to take advantage of the economies of scale the canal offers. In April, the first neo-Panamax cruise ship, capable of carrying up to 4,000 passengers, transited the new locks.

The expansion has brought the ability for ports in Asia to effectively bypass the West Coast and send their shipments through the Canal and directly to the East Coast, rather than send them to the West Coast and have them trucked through the inland United States to their final destinations.

This of course, has led to numerous ports up and down the Eastern seaboard seeing sometimes record-setting throughput increases. For example, in January, the Ports of Charleston in South Carolina, Philadelphia in Pennsylvania, Virginia and Baltimore all have recorded record container volume growths since the beginning of the year.

And while the LA-Long Beach mega port complex has set out to meet the challenges that the expanded Panama Canal presents, so have numerous other ports throughout the US West Coast.

Among those seaports is the third-busiest one in California and fifth busiest in the US, the Port of Oakland.

Port of Oakland

Like many large and medium-sized West Coast ports, Oakland is engaged in ongoing improvement projects that weren't necessarily birthed by fear of losing market share to East Coast ports by the opening of the new Panama Canal locks, but to remain competitive in a changing world where ships are being built bigger and bigger, with larger and larger container capacities.

In early 2016, Oakland International Container Terminal, which handles about 70 percent of the port's maritime cargo, introduced night gate hours from Monday through Thursday in an effort to push more cargo through and reduce congestion.

Since the implementation of the extended hours, the terminal has been conducting about 1,200 to 1,400 gate transactions on the night side daily, port spokesman Mike Zampa told Pacific Maritime Magazine.

The result, Zampa said, is that average trucker transaction times have fallen 40 percent, enabling cargo to move faster and drivers to make more trips per day, something that is key to their livelihood.

The night hours have worked out so well that in early March, the Harbor Trucker Association and the California Trucking Association jointly awarded the terminal with their first-ever Terminal Recognition Award, and another Oakland terminal, TraPac, recently opened Monday, Tuesday and Thursday night gates.

Oakland's OICT is also the site of a project where as many as six 366-foot-tall cranes will eventually be raised 27 feet higher. The $14 million-to-$21 million project is expected to begin this spring, with the objective being easier loading and unloading of megaships with containers stacked high above deck.

It takes nine or 10 weeks to raise cranes, Zampa said – they must be jacked up, the lower legs cut away and new extensions put in place. The port will pay for the work initially, with terminal operator SSA Marine repaying Oakland over the life of its lease with the port.

Port of Vancouver USA

At the Port of Vancouver in Washington, one of the big projects underway to increase its overall competitiveness is the West Vancouver Freight Access project, which is a long-term concerted effort by the port to invest in rail infrastructure.

The project, which began in 2007 – the same year as the beginning of the expansion of the Panama Canal – is nearing completion, according to the port.

"WVFA is on track for completion in early 2018," port spokeswoman Abbi Russell told Pacific Maritime Magazine. "Crews are making progress on constructing the final two pieces of the project, which will replace a loading facility and add capacity for one of our dry bulk customers."

The last two projects will take the port's internal track miles to 42 – from 16 miles before WVFA – thereby adding capacity and reducing congestion. Overall, the freight access project could reduce congestion on the BNSF Railway and Union Pacific Railroad mainlines by up to 40 percent, Russell said.

The combination of West Vancouver Freight Access and a Columbia River channel deepening completed in 2010 that deepened the navigation channel to 43 feet, have resulted in significant investment by Port of Vancouver tenants, Russell said, and the channel deepening has resulted in investment by tenants at other ports as well as other river users.

"These two major investments have widespread benefits that help increase our region's competitiveness by allowing for more commerce on the rail lines – including unit train capability at the Port of Vancouver – and larger vessels in the Columbia River," Russell said. "All of these benefits help increase efficiency and support US businesses in an ever more competitive global market."

Meanwhile, Vancouver USA is still seeking an operator for Terminal 5, a currently unused marine facility that features about 40 acres in the southern portion of the terminal and consists partially of existing fixed dock and nearby floating dock at Terminal 4 for cars, as well as laydown space, rail access and the option to add additional rail.

Terminal 5 is served by a loop track completed in 2010 as part of the $275 million West Vancouver Freight Access project, and because of that, according to the port, ideal for a mineral bulk or auto facility.

Russell said the port received several responses to a Terminal 5 Request for Statements of Interest, which was sent out in November 2016 and closed in January, and that a team of staffers is reviewing responses and could select a few firms to interview this spring.

The 40-acre property available and ready for development features access to the 43-foot-deep Columbia River navigation channel and a loop track that allows unit trains to be handled within the internal rail complex. There's also room to add two arrival/departure tracks in the corridor, as well, plus access to ground transportation, including a grade-separated roadway to take trucks into and out of the port over the top of several sets of tracks.

"If we identify an opportunity that is a good fit with the port and our community, we hope to move as quickly as possible to help a customer get established at Terminal 5," Russell said.

Port of Portland

And although some East Coast ports are seeing a sizable increase of cargo thanks to the expanded Panama Canal, that doesn't necessarily mean that less cargo is coming through the West Coast.

At the Port of Portland, Oregon for instance, the number of calls by oceangoing vessels increased by 14 percent in 2016, according to data, and the amount of total tonnage was up 22 percent last year compared to the year before. The numbers reversed an annual downward trend that had been ongoing the past few years.

A big part of the reason for the port's thriving throughput is its auto exports. A total of 291,000 vehicles rolled through Portland's terminals to foreign markets and from domestic manufacturers last year, an 11 percent increase over 2015.

"We can attribute some of the success on our auto business to China's increasing disposable income and interest in American made vehicles. Ford has been aggressive in opening up dealerships in China, and we've been fortunate enough to handle those Fords," port spokeswoman Melanie Mesaros told Pacific Maritime Magazine.

Before last year, Portland's oceangoing vessel calls and total tonnage numbers both had dropped incrementally each year since 2012.

"There are a few reasons for this – complete loss of our container service, loss of breakbulk cargo, including steel slab to Vancouver, Washington, steel rail to Stockton, and the completion of channel deepening in 2010," Mesaros explained. "The deepening allowed for bulk vessels to load more cargo, which resulted in a decrease in the number of vessels calling Portland."

"Regarding the containers, the port and ICTSI reached a mutual agreement to end the lease at Terminal 6, which will allow for a fresh start," she said, referencing the February exit of the terminal operator, just a few years into a 25-year lease. Portland and ICTSI signed the lease with ICTSI Oregon in 2010 in an attempt to ensure a long-term funding mechanism for Oregon's only deep draft international container terminal. But after that, productivity at Terminal 6 became hampered by labor problems, including a jurisdiction battle between the International Longshore & Warehouse Union and an electricians union.

ICTSI's exit earlier this year followed two shipping companies, Hapag-Lloyd and Hanjin Shipping, pulling out of calling at Terminal 6. Hanjin at the time represented 75 percent of the terminal's traffic.

But Portland hasn't given up on the property and has been considering its options.

"We are going to work with a broad range of stakeholders to devise a new plan with a focus on supporting Oregon and Northwest companies with access to markets," Mesaros said.

Port of Olympia

At the Port of Olympia, the recent challenges mostly haven't come from a canal 5,000 miles away, but from activists and workers in their own backyard.

In recent months, there have been protests at and near the port regarding import and export by rail of certain hot-button cargoes, including shipments of ceramic-coated sand, which is used in the process of hydraulic fracturing, a controversial process of extracting natural gas from underground that is commonly known as fracking.

Such shipments have been the subject of protests at and around the port for the past several months, but the port says it has no intention of impeding the materials' passage through Olympia.

"While some members of our community would like to see the port restrict certain cargoes, the Port of Olympia is committed to following the Federal Shipping Act of 1984, which restricts the denial of cargo so long as it is a safe and legal cargo and the port has the equipment and infrastructure to handle the cargo," port spokeswoman Jennie Foglia-Jones told Pacific Maritime Magazine.

This US-built Ford truck is on its way to China via the Port of Portland, Oregon. Photo courtesy of the Port of Portland.

"The port also has contracts in place that we intend to honor," she said, adding that Olympia has taken the precaution of no longer engaging in what it considers non-essential communications regarding the movement of certain cargoes, in order to aid in protecting customers' cargoes.

Another issue was brought to light back in March, when a longshore worker, citing crowding and a lack of space at the port's marine terminal, requested that the Port Commission consider opening up Berth 4, which hasn't been in use since the early 1990s.

"Rebuilding Berth 4 has been a discussion over the years, however, it is not in our plans to discuss in the near future," Foglia-Jones said.

But with other ports up and down the West Coast still growing and thriving despite increased competition from the expanded Panama Canal, it's not difficult to imagine a time in the not-too-distant future where Olympia has a need to create more room for ships and storage.

 
 

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