November 12, 2009

US West Coast Ports Band Together for China Trade

The World Shipping Summit 2009 is underway in Qingdao, Shandong Province, and the big 5 port districts of the west coast of USA (LA-Long Beach, Oakland, Tacoma, Seattle, Portland - in that order) announced a US West Coast Collaboration Panel. The panel is joined by Warren Buffet's Burlington Northern & Sante Fe Railroad and Union Pacific Railroad. Analysts see this as an effort to maintain market share in Chinese trade.

The ports are under pressure from the following forces - high costs associated with union labor wages, anti-pollution fees, and new ports closer to population centers in middle and eastern America that will be serviced by the widening of the Panama Canal. In the aftermath of the Panic of '08, port traffic has plummeted - LA-Long Beach for example is back to 2001 levels. But cooperation with competitors and better integration with railroads can help the ports maintain their lead in bringing containers from China and distributing them to logistics centers and factories across the USA.

Absent from the summit is representation from Mexico where the federal government continues to back a new container port at Punta Colonet in Baja peninsula. That development has been scaled back, however, to 1 million TEU (twenty-foot equivalent) containers capacity per year. Proposals for development are in but the Mexican government has not released any details yet....

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