US West Coast Not Ready for Mega Boxships

Maritime Activity Reports, Inc.

December 23, 2015

Graph: Drewry Shipping Consultants Limited

Graph: Drewry Shipping Consultants Limited

 CMA CGM is testing the ability of the U.S. West Coast ports to handle the biggest containerships – are they ready?

U.S. West Coast ports are not yet in a position to handle 18,000 teu containerships regularly and have much work to do in terms of improving productivity if they are to see them call on anything other than an ad-hoc basis.
The 18,000-teu CMA CGM Benjamin Franklin will become the largest containership to call at any U.S. port when it arrives at the port of Los Angeles on 26 December. 
The new ship was delivered to French carrier CMA CGM at the start of the month and will join the Asia-U.S. West Coast ‘Pearl River Express’ service, part of the Ocean Three network, that normally operates with seven ships of around 11,400 teu.
It is not yet known whether this is just a trial-run although CMA CGM’s forward schedules do show that the same ship will return to the USWC in mid-February to make a visit to Long Beach.
The story is largely a public relations exercise – CMA CGM will soon become the largest player in the Transpacific market after the takeover of APL and for the port of Los Angeles it provides more welcome headlines than those generated earlier in the year when labour dispute and port congestion dominated – but it is significant because these Ultra Large Container Vessels (ULCVs) have until now only been viable in the Asia-Europe route so having an additional deployment option would give carriers much more operational flexibility.
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.
Bigger ships demand faster container handling speed and operational productivity. However, while overall berth productivity does increase with ship size, it does not increase directly in line. 
This is because the length of ULCVs has not increased in proportion with their teu intake (they have got wider, deeper and stacked higher instead) meaning the number of gantry cranes deployed per vessel cannot be increased in direct proportion to ship sizes.
Also, as the average size of ships grows and more cargo is squeezed onto fewer weekly services terminals have to prepare for much greater peaks in container activity. This problem is exacerbated on the USWC as ships often only call at a couple of ports, unlike in Europe, meaning those U.S. ports have to handle a higher ratio of boxes per ship call.
The problems for terminals arising from the introduction of ULCVs have thus far been limited to those in Asia and Europe, but the global cascade of ships is upsizing the assets used in virtually every trade worldwide.
The size of containerships deployed on the Asia-USWC route has been steadily increasing with the average size rising by around 14 percent in just two years to reach 7,600 teu. There are now over 50 ships of 10,000 teu or above deployed on the route whereas at the start of 2014 there were only 14.
The vessel upsizing trend in the Asia-USWC will certainly continue as carriers such as Maersk Line and CSCL have ordered 14,000 teu units specifically for that trade, while the ongoing cascade of similar sized vessels from Asia-Europe will also boost the average.
It’s important for the U.S. West Coast ports to step up as they are losing some of their dominant market share to their rivals on the East Coast, which will soon get a boost from the expanded Panama Canal that will triple the maximum size of containership that can call there.
Despite the labour-related setbacks earlier this year the combined container throughput at Los Angeles and Long Beach is on course to be the highest since 2007 with combined handling after 11 months up by 1.4 percent on last year at 14.1 million teu.
Taking the shine off somewhat is the fact the year-to-date growth has been entirely driven by increased handling of empty containers, which are up by 15 percent. In contrast, loaded inbound handling was unchanged while outbound liftings were down by 10 percent.
The failure of LA-LB to surpass the throughput heights of 2006 is indicative of the growing share of the U.S. container pie that East Coast ports are taking. For example, in 2012 the West Coast terminals handled some 73 percent of all laden boxes originating in Asia, but by the end of the third quarter of 2015 that ratio was reduced to 68 percent.
Forgetting the recent labour 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 USWC ports will be in a position to step up to the next level and handle mega-ships such as CMA CGM Benjamin Franklin.
There is much to be done. On the quayside USWC ports will have to gear up in terms of water depth, quay length, and cranes, but there is also a need to improve the efficiency of how cargo is brought to and from the port complex via truckers (who are in short supply) and intermodal railroad.
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 unionised Dockers, something that seems a long way off.
Introducing too many ULCVs to the West Coast ports before they are fully ready would most likely worsen productivity, rather than improve matters, and could add days to the load and discharge time for boxes at terminals, thus undermining the USWC’s competitiveness versus the USEC.
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