NEW YORK — Ocean carrier APL is looking to the Suez Canal to provide alternatives to the congestion and continual threat of strikes at West Coast ports.
The New York Container Terminal Inc. in Staten Island will welcome the 903-foot containership President Adams on Friday, the first vessel in APL's new Suez Express service. The new route allows ships to make the run from Singapore through the Suez Canal to New York in 21 days. APL has put eight ships capable of carrying between 4,000 and 4,500 20-foot equivalent units, or TEU — the standard maritime industry measurement used to count cargo — on the new route.
Bob Sappio, an APL senior vice president and head of trans-Pacific trade services, said the need for alternatives to bringing in goods through West Coast ports, particularly the ports of Los Angeles and Long Beach, Calif., will only increase as trade volumes rise.
"West Coast ports continue to be challenged with growing volumes and an infrastructure that continues to have problems coping with that growth," said Sappio.
He acknowledged that while trade from Asia continues to grow, the increases have moderated. The National Retail Federation's monthly Port Tracker report said congestion at the twin ports of Los Angeles and Long Beach was currently low, but noted the nation's major ports would handle record levels of container traffic in August. While the ports may be handling the volume, Sappio said the truck and rail infrastructures responsible for moving the goods across the country are still facing considerable problems.
"Velocity of the railroads has certainly been less than stellar," said Sappio. "We continue to struggle with getting cargo across the country intermodally."
Strikes and lockouts have been another concern. In 2002, a labor dispute between the International Longshore and Warehouse Union and port operators shut down 29 major ports along the West Coast for 11 days and was estimated to have cost billions of dollars. Another strike at Los Angeles/Long Beach was narrowly avoided in July 2004 when the dockworkers union and major shipping lines reached an agreement to hire an additional 2,000 nonunion workers to handle the rising traffic. A strike at Los Angeles/Long Beach was averted at the end of last month after almost two weeks of negotiations between the 930-member Office Clerical Unit of Local 63, a division of the ILWU, and 14 shipping companies to reach a new three-year contract. For every day the ports are shut down, it takes about a week to recover, according to Sappio, who noted the ILWU contract is up for renewal in 2008."We never know with any certainty just how those things are going to play out," he said. "In 2002, things were quite messy."
The popular alternative to using West Coast ports has been taking advantage of the Panama Canal to bring goods into the country via the East Coast. According to Sappio, about 78 percent of cargo from Asia enters through the West Coast. The majority of the remaining 22 percent makes its way to the East Coast through the Panama Canal. But that, too, is facing serious issues with congestion and expansion projects aren't likely to be completed until 2014 or 2015. The Suez Canal, on the other hand, faces considerably less congestion.
East Coast ports are reaping the benefits of those seeking to mitigate their dependence on the West Coast. Container traffic at the Port of New York and New Jersey has skyrocketed over the last 15 years. According to the Port Authority of New York and New Jersey, container traffic rose 173 percent to 5.1 million TEU in 2006 compared with 1.9 million TEU in 1991. Imports of loaded containers has also been on the rise. In 2006, loaded imports rose 7.9 percent to 2.6 million TEU from 2.4 million TEU in 2005.
APL's new service also positions the carrier to take advantage of several of the world's emerging sourcing destinations. The new service includes stops in places such as Chennai in India, Colombo in Sri Lanka and Ho Chi Minh City in Vietnam. For each location, the transit time to the East Coast runs between 21 and 25 days.
"As places like India, Indonesia and Thailand take off, we are seeing a need for more capabilities and service offerings from this area," said Sappio.
An expanded Panama Canal and using the Suez will provide only "partial answers" to those moving goods into the country, said Sappio.
"Despite what you do through the Panama or Suez canals, or other West Coast gateways, Los Angeles has to work," he said.
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