OAKLAND, Calif. – With a bitter battle over a dockworkers’ contract tentatively resolved, West Coast ports and their terminal operators are back dealing with an even bigger challenge – the mega-ship.
Bulked up like weightlifters on steroids, the new container vessels have set off a competitive scramble by the ports, which are dredging new channels, buying equipment and planning vast additions to warehouse space to accommodate the mega-ships, with the price tag for improvements running into billions of dollars.
“There are monsters out there, and unless we learn how to deal with these monsters, we’re going to lose business and tremendously affect the economies of the ports and the regions around them,” said Jock O’Connell, international trade adviser for Beacon Economics.
Staying competitive with ports elsewhere is crucial for this region’s economy. The West Coast ports handled 43.5 percent of U.S. containerized imports in 2013, down from 50 percent in 2002, according to the Pacific Maritime Association. The good news is that the recovering economy has increased the flow of goods across the Pacific as retail sales bounce back in the U.S.
For ocean carriers, building bigger ships is a matter of economics: The larger vessels are, the lower the cost of moving a container. The trend began as the industry recovered from the recession, which had hammered revenue and profits. Experts say the message from the shipping lines to the ports is this: Get ready for us or we’ll find a port that is.
“Ocean carriers will continue to invest in larger and larger ships in years ahead to reduce cost per container and to reduce costs to customers,” said Noel Hacegaba, chief commercial officer at the Port of Long Beach. “It’s good for them and their customers, but the terminals and the ports where these big vessels call have to make drastic changes to be able to accommodate the surge in volume.”
Container ships have grown from those capable of carrying 8,500 20-foot-long containers in the early 2000s to one on the drawing boards today expected to haul almost 24,000 containers. Anything exceeding 10,000 containers is considered a mega-ship. Regardless of the vessel’s size, shippers want them unloaded quickly, so they can return to Asia for more cargo. And they just keep growing in the number of containers they can carry.