Container ports struggle to process record volumes
(Article originally published in Sept/Oct 2021 edition.)
“It never rains but it pours.” Does that age-old expression shed some light on the present state of the container industry? Ports are basking in record container volumes but also facing unprecedented operational challenges.
When the Meishan Terminal at the Chinese port of Ningbo-Zhoushan, the world’s third busiest container port, shut down temporarily in August with the discovery of a single COVID-19 case, cargo owners, carriers and ports all over the world felt the closure in a big way. Meishan’s brief closing, coupled with the continued impact of COVID-19 and ongoing supply chain disruptions, have been a constant challenge for the container industry.
With huge demand for everything from construction materials to consumer products, the industry has struggled to maintain vessel schedules while dealing with container shortages, port closures and record congestion at ports and terminals.
But through it all, the key players have all shown resilience, finding ways to keep things moving and at the same time pursuing projects to support growth. The Port of Savannah is a good example.
For the first time in its history, Savannah moved over five million TEUs (twenty-foot equivalent container units) in the fiscal year ended June 30, growing cargo volumes by 20 percent over 2020. Griff Lynch, Executive Director of the Georgia Ports Authority (GPA), explains the increase this way:
“Customers have been increasing shipments to U.S. East Coast ports to stage cargo closer to major markets where e-commerce is driving sales. This factor was coupled with a new reality in the logistics industry. Over the past year, many Americans were precluded from spending on travel and other services. This meant a rise in disposable income for the purchase of the goods handled by the Port of Savannah. It’s difficult to predict how long this new trend might last. However, market data indicates continued strength in cargo volumes through at least the end of the year.”
Like others, however, Savannah hasn’t escaped the resulting congestion.
“With distribution centers struggling to handle current import volumes, warehouse operators are leaving more containers on terminals for a longer period,” says Lynch. “For several weeks, the Garden City Terminal has averaged around 80,000 containers on terminal, up from less than 60,000 at this time last year. GPA is working with customers to shift cargo to rail, which has a dwell time of less than two days at Garden City.”
With growing volumes, Savannah is moving forward with infrastructure projects. In July, the GPA board approved $525 million in bonds to fund berth and container yard enhancements and has expedited projects to add more than 1.4 million TEUs of annual yard capacity. Improvements underway at the Garden City Terminal will be completed in 2023 and allow Savannah to simultaneously serve four 16,000-TEU vessels and three additional ships. To add lift capacity, GPA is buying eight new ship-to-shore cranes.
Upon completion of the Savannah Harbor deepening project this year, the port will have the river depth, dock space and ship-to-shore crane fleet to handle vessels in the 20,000-TEU range once the Talmadge Bridge, downriver from Garden City, is raised to provide sufficient clearance.
Port Tampa Bay saw a year-over-year increase in TEU volumes of 46 percent in the last nine months, reflecting both increased consumer spending during the pandemic as well as continued expansion of the Florida market – in particular, new and expanded distribution centers along the Tampa/Orlando I-4 Corridor. Helping to grow the port’s numbers, Dole Ocean Cargo Express began a new, direct weekly service from Honduras and Guatemala in July, serving the perishable/refrigerated market as well as dry cargo.
Unlike other ports, congestion has not been an issue – so far. “Thanks to our ongoing capacity expansion plans,” explains Wade Elliott, Vice President of Business Development, “we’ve continued to stay ahead of the curve and have been able to easily accommodate this growth without experiencing any berth or gate congestion.”
On the infrastructure side, Port Tampa Bay has added 22 acres of paved storage while terminal operator Ports America introduced a new and more efficient operating system, Navis N-4. Additional capacity expansion now underway includes a third deepwater berth, increased paved storage to 100 acres, a new gate complex and added cranes and equipment.
Port Everglades broke its historic high for July with 91,285 TEUs while year-over-year TEUs are up nine percent. “We’re confident we will once again top one million TEUs this fiscal year,” says Chief Executive & Port Director Jonathan Daniels, “signaling a clear return to pre-pandemic trade between the U.S., Latin America and the Caribbean.”
Port Everglades is the nation’s top gateway for waterborne commerce with Latin America, accounting for 13 percent of this trade. Meanwhile, other trade lanes are growing. “Our European numbers increased because Ocean Network Express (ONE) and its alliance partners (Hapag-Lloyd, HMM and Yang Ming Line) revised the AL5 transatlantic schedule with the addition of Port Everglades in April,” Daniels adds.
Port Everglades is currently in final negotiations with ZPMC to purchase three additional low-profile, super post-Panamax cranes. Also planned are major upgrades to seven existing post-Panamax cranes.
The Port of Montreal, with its labor issues settled, celebrated the arrival in July of the 6,730-TEU vessel, MSC Melissa, the largest container vessel to sail the St. Lawrence River. “We look forward to seeing others in the future,” says Melanie Nadeau, Vice President for Public Affairs & Community Relations. “2021 is definitely shaping up to be a good year for the port. As of the end of July, we recorded an increase of 5.5 percent for the container market compared to the same period in 2020.”
Through the end of July the port handled slightly over a million TEUs. Its infrastructure got a boost in late August with the arrival of the first two of four Liebherr electric gantry cranes for the Case Terminal. Preliminary work also continues on the Contrecoeur Terminal expansion.
While Montreal was welcoming new electric cranes, the Port of Long Beach celebrated the completion of the Long Beach Container Terminal at Middle Harbor, one of the most technologically advanced cargo facilities in the world. Equipped with nearly all electric and zero-emissions equipment, the new terminal is designed to strengthen competitiveness, improve cargo flow and dramatically enhance air quality at a time of significant growth at the nation’s second-busiest seaport.
The third and final phase of the project includes expanding the terminal to 300 acres with a completed container yard, administration building and on-dock rail yard designed to handle 1.1 million TEUs annually. Additionally, 14 of the most modern ship-to-shore gantry cranes line a new 4,200-foot-long concrete wharf capable of welcoming three massive ships at once. All ships calling at the terminal will plug into shore power connections while berthed.
The new terminal coincided with the port’s strongest August on record, during which it handled 807,704 TEUs, an 11.3 percent increase over August 2020. Through the first eight months of 2021, Long Beach has moved 6,346,377 TEUs, a 29.2 percent increase over 2020.
Internationally, the Port of Nansha – part of the Guangzhou Port Group and reportedly the fastest growing deepwater port in South China – is up nearly 10 percent over last year with a throughput of approximately 12.5 million TEUs.
“The market is booming,” says John Painter, President & CEO at Guangzhou Port America, “and with pent-up demand, many accounts are looking for options to help find space and equipment. As a result, ‘port diversification’ has become a very strong tactic to help balance out their supply chains.”
Nansha has several key infrastructure initiatives underway including on-dock rail, terminal expansion, three new dry warehouses and a new cold logistics facility. The first phase of the cold storage facilities, which will include three buildings, each eight floors high, will be completed in November. “Phase II will then start and, depending on market conditions, we’ll move forward with another cold or dry facility,” Painter adds.
The on-dock rail connection is complete, and the port is now filing all the necessary documents and permit applications to be operational by November or December and ready in the first quarter of 2022 for accounts to move from Nansha to Europe via rail.
Highs & Lows
While ports and terminals deal with their operational challenges, it’s revealing to get a carrier’s perspective. Andy Abbott, President & CEO of Atlantic Container Line (ACL), paints a vivid picture of the highs and lows of ACL’s year since last December.
“December is normally a slower month but we had full ships every week, which caught us by surprise,” he says. “Import cargo went ballistic last December. Booking demand grew every month since and we couldn’t handle all the cargo being offered to us. August was overbooked as well. Now here we are in September and we don’t have a good reading on what is to come with several machinery producers complaining about a shortage of parts from China. Will that have an impact on volume?”
He says every indicator points to a “continuation of steady volume at least until the end of the year and probably into the spring unless inflation takes off and hits the stock market.” ACL has experienced port congestion delays on virtually every voyage. Labor shortages in many ports, exacerbated by the occasional COVID flare-up, made it extremely difficult to maintain a schedule.
“Despite all this,” Abbott concludes, “ACL has only blanked two sailings over the past 18 months. Most of our ships are within 24 hours of schedule at the moment, but you never know what new adventure or disturbance lies around the corner at the next port.” – MarEx
Halifax-based Tom Peters is the magazine’s ports columnist.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.