More Ships Heading to U.S. East Coast Ports at the Expense of the West

Wednesday July 22, 2015

U.S. East Coast bunker suppliers are seeing more demand opportunity this year as shipping traffic has surged following West Coast port congestion from a labour dispute and other problems, the Financial Times reports.

The boost in both the number and size of vessels being sent to East Coast ports is said to reflect an effort by shipping lines to cut the costs of moving goods to the country's East, and it is reportedly coming at the expense of West Coast port growth where Los Angeles has seen 3.67 percent decrease in traffic, and Long Beach's growth is up just 0.1 percent.

On the other side of the country, Charleston's container facility has reportedly a experienced 14 percent volume growth from June 2014 to June 2015, while the Port of New York/New Jersey is said to be up 12 percent year on year.

Jim Newsome, Chief Executive for the South Carolina Ports Authority, commenting on the East Coast shipping growth said, "it makes the most sense to get cargo close to where people live, as opposed to rolling it across the country. I think that will continue to some degree."

Shipping lines' East Coast diversions have also boosted container traffic at Savannah, Georgia's port by 16.4 percent year on year from January to May of 2015, growth that has reportedly encouraged retailers to develop nearby distribution centres.

"Just like most east coast ports are experiencing, we're seeing a lot of diversion from the west coast to the east coast," said Curtis Foltz, Executive Director of the Georgia Ports Authority, calling this year's growth an "anomaly" and "over the top".

Savannah's growth is also bringing in larger vessels then would have been seen in the past due to the port's shallow waters that can only be navigated by large ships at high tide.

"We've been able to overcome it up to this point because of our superior landside infrastructure," said Foltz.

"Make no mistake about it - the shipping lines are having to work around tides; they're having to light-load ships. It's not an optimal situation. It's our Achilles heel," he added.

Panama Canal

Neil Davidson, an analyst with Drewry Shipping Consultants has noted that when the Panama Canal expansion is complete the number and size of vessels being sent to the U.S. East Coast will only continue to increase.

"The ship sizes will go up markedly," said Davidson.

"Savannah is a strong enough attraction for the cargo that the shipping lines will find a way, hope that it gets better in terms of vessel access, and work round in the meantime."

To accommodate the larger sized ships, Savannah is said to have already started dredging its shipping channels, while New York/New Jersey have been raising the Bayonne Bridge.

In June, The Boston Consulting Group (BCG) said that the completion of the Panama Canal expansion could mean as much as 10 percent of East Asia container traffic currently going to the U.S. West Coast would switch to East Coast ports by 2020.