Port Authority of NY and NJ have announced a new container fee payable by ocean carriers. The fee will be levied when the outbound containers don’t exceed inbound containers by 110% in the same period. The port authority also plans to find additional space to store containers near the port, and already has identified 12 acres on the port.
It seems that these two measures are what works to reduce congestion. The same two kinds of measures were invoked at the Port of LA and Port of Long Beach to get ocean lines to start moving empties out. In California, though, the container fees were just threatened; they never were begun. that alone was enough for ocean carriers to start moving containers out.
Perhaps we have found a credible set of options to get container carriers to move those boxes.
There are now too many containers in the world. And they are cluttering up the ports and yards we need to move containers through. And they cause detention and demurrage charges, because lines won’t move them out of ports.
The global container pool is around 50 million TEU right now. According to Drewry, that is an excess of 6 million TEU. However, Drewry is not too concerned about the excess at present, feeling they can be absorbed if trade picks up. Interestingly, Drewry seems to think that the excess will be absorbed by ‘slower sailing’!
As economics tells us to expect, the price of second-hand containers is falling. However, some carriers, such as Evergreen, continue to order more. Most containers are built in China these days. Three Chinese firms, with state connections, are the primary sources. The problem is that empty used containers cost a lot to return to exporting destinations. They displace paying cargo, forcing ocean carriers to use space to carry them. And especially, with the cost of bunker fuel in the stratosphere, and the need to use very low sulfur fuel in some busy port areas, the transportation cost is high. Ocean carriers have to ‘bundle’ the cost of returns into the one-way cost of the loaded shipment. Either that, or they take a hit by moving the old containers back.
The Seatrade article by Gary Howard has nice graphs showing the average price of 40-foot used containers in Europe, and in China, provided by Container xChange. Again the question of where excess containers will be stored is raised. There haven’t been many answers to that one yet.
The Port of Long Beach has made a deal with a Utah site to transfer containers there, to relieve the congestion at the Long Beach terminal yards.
Moving containers by rail to Utah will clear space at the port and allow faster unloading there. The containers can then be picked up in Utah and forwarded to the points in the US.
This is a good strategy for the port. Many European ports, such as Rotterdam, Hamburg, and Antwerp, have done the same thing. In Europe, the containers tend to be moved by river barge or truck, but in the US, rail is the natural transportation mode to use.
It’s an idea that has been suggested years ago for the large ports on the West Coast US, but it took a crisis for it to happen.
I thought that long ago the ports would make such agreements with the Centerpoint complex in the Chicago area. Much of the container cargo moves to the Chicago area, for distribution to the rest of the United States. 8 years ago, Centerpoint had empty space available. Now it is completely built out, according to my informants.
Below the articles, I’ve provided my reference to our article of 2014, which suggested forging alliances with the Chicago warehouses.
Clott, Christopher B. and Bruce C. Hartman. (2014). “Supply Chain Integration, Landside Operations and Port Accessibility in Metropolitan Chicago”. Journal of Transportation Geography (51) 131-139. DOI: 10.1016/j.jtrangeo.2015.12.005