Competitive Shipping Roundup: UP to expand intermodal; Port congestion getting worse

Compiled by Bruce Abbe, SSGA Strategic Adviser for Trade and Transportation

UP to expand intermodal
During a fourth-quarter stock earnings call last week, Union Pacific railroad executives announced plans for the western Class I railroad to expand its intermodal container infrastructure.    

Of keen interest to many of SSGA’s Upper Midwest shippers, UP said it will expand its recently restarted intermodal facility in Minneapolis from a “pop-up” to a full intermodal terminal. 

UP officials said the railroad will also be adding capacity to its facilities in the Inland Empire area of Southern California east of the ports of Long Beach and Los Angeles, and it will be concluding a project to install wide-span big gantry cranes at its Global IV facility in Chicago. 

Its capital investment plans also include adding more rail cars, more sidings and other upgrades. Go here for the full story. 

Port congestion getting worse
Danish global container shipping consulting firm Sea-Intelligence recently analyzed data it receives from ocean carriers and concluded there are no signs yet heading into the new year that port congestion and bottlenecks are easing up.   

The analytical firm ran the numbers and determined that 11.5% of global container shipping capacity was taken out of the market in November due to ships being parked off ports, notably U.S. West Coast ports. That was marginally better than 12.5% taken out of the market in October. Add that lost capacity to what Sea-Intelligence said was an increase of global demand by 7%, and you’ve got the crunch shipping is now experiencing. 

Sea-Intelligence CEO Alan Murphy indicated available data shows congestion issues worsening as 2022 begins, without signs of improvement yet. Go here for the full story. 

Ocean carriers post $150 Billion profit year
Bloomberg News and the American Journal of Transportation reported last week the leading ocean container carriers earned an estimated $150 billion in profits by year end 2021, thanks to extraordinary high rates for consumer goods imports. Yet reliability – ships arriving within scheduled arrival times – hovered between only 33 to 40% during the year. 

Spot rates for 40-foot containers shipped from Asia to the U.S. topped $20,000, up from $2,000 just a few years ago, and recently has been holding around $14,000. Not all shippers pay those rates, thanks to long-term contracts, but new contract negotiations will be getting underway during a period of high existing rates. Smaller importers and exporters in many countries are feeling the heat, with the situation magnified by the market concentration of the ocean shipping lines.  Go here for the detailed report. 

Not all shippers suffer the same 
Not all importers and exporters have been suffering to the same degree. Prominent shipping analyst Lars Jensen, CEO of Vespucci Maritime, told the Journal of Commerce that despite the huge delays at the delays and shut downs in some trade lanes, many of the biggest consumer product companies are reporting record profits as well – among them Walmart, Target, Home Depot, Lowes and Dole Food.   Those are companies in the center of the consumer product demand surge. Go here for the full story. 

U.S. ports report record volumes
With 2021 behind us, the United States’ main container shipping ports are reporting much-increased, and, in many cases, record container traffic for the year. The sharpest increases are in imports handled.  Exports were strong too – if you include empties among the exports. For loaded exports, including agricultural exports, the story is far different with the West Coast ports showing declines, while East Coast ports held their own or increased as well: 

• Northwest Seaport Alliance: The jointly operated ports of Seattle and Tacoma (NWSA) saw its container traffic hit 3,736,200 20-food-equivalents (TEU) – up 12.5% from 2020. Imports were 1,554,671 TEU, up 16.8%. Exports were at 1,427,449 TEU. However, full loaded exports declined by 12.5%.  Go here for a full report. 
• California ports: The Port of Los Angeles (POLA), the largest in the U.S., hit a yearly annual record of 10.7 million TEU in 2021 – up 13% from 2020. The Port of Long Beach (POLB), its next door neighbor and second-largest, posted a total of 9,384,368 TEU, up 15.7% and the first time it has topped 9 million TEU handled. However, loaded exports have been down nearly all year at the big southern California ports. The Port of Oakland handled 2,448,248 TEU, down 0.5% for the year. Oakland has been a focus of efforts by the industry regulators and experts to diversify incoming cargo to try to relieve congestion pressure. Go here for more information. 
• East Coast, Gulf ports: Over on the East Coast and Gulf Coast, container traffic at region ports have also been setting records, with the story more positive for exports. The Port of Virginia in Norfolk handled a record 3.5 million TEU, up a whopping 25.2% from 2020. That included an increase in loaded exports of 11.6% to 1.05 million TEU. Loaded imports were up 27.5% to 1.68 million TEU. The Port of Charleston handled 2.75 million TEU at its terminals – up 19% from 2020, and up 13% from 2019.  Imports were up 25% to 1.29 million TEU at Charleston, while loaded exports were also up posting a 5% increase to 814,94 TEO. The Port of Mobile, Alabama on the Gulf of Mexico posted increased container cargo by 19% to a record 502,623. Go here for the full story.

Porcari addresses container crisis
John Porcari, the Biden Administration’s port envoy and head of the administration’s task force to address the supply chain crisis, recently spoke to the International Propeller Club of the United States, a major shipping industry annual event.    

Porcari covered a full range of steps the administration has and is taking to address the crisis, including a host of infrastructure investments and pressing for service improvements.    

He also addressed the problems U.S. exporters have been facing finding space for containers on ships.    

“It is not acceptable to disadvantage U.S. exporters,” he said. 

Go here for the full story.