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Port Congestion Unlikely
Heading into Summer and Fall Shipping Seasons

by Jeff Berman, Senior Editor
Logistics Management, June 6, 2006

WASHINGTON -- Unlike in past years, United States-based retail container ports are currently running smoothly and congestion issues, which have previously plagued the ports, will not hamper operations later this summer and into the fall, according to the recently released June Port Tracker report by the National Retail Federation, a national retail trade association, and Global Insight, a provider of economic and financial information.

The U.S.-based ports surveyed in the Port Tracker, including Los Angeles/Long Beach, Oakland, Tacoma, Seattle, New York/New Jersey, Hampton Roads, Charleston and Savannah, handled a cumulative 1.32 million Twenty-foot Equivalent Units (TEUs) of container traffic in April, which is the most recent that data is available. This represents an increase from the 1.27 million TEUs recorded in March.

With the number of monthly TEUs continuing to increase, the outlook for this year's peak season is still positive, with no major congestion expected at any of the covered ports so shippers can keep to their original importing plans for this year for now," said Global Insight economist Paul Bingham.

Another reason for the favorable forecast is that various members of the trade community are stepping up to the challenges as monthly container volumes continue to increase heading into peak season, noted Bingham. This is being done by taking steps to prevent incidents that could cause extended delays or congestion from getting out of hand. And the key to staying on top of things to continue congestion avoidance, said Bingham, is vigilance in monitoring every part of the system from overseas land network to inland U.S. distribution center delivery.

Although things appear to be positive for the foreseeable future, Bingham indicated that there still are concerns with port trucking for later in the year. The fundamental concern, he said, is that the level of containers expected to be flowing through the ports in this peak season will again exceed the record levels handled last year, and this means the bar has been raised again and just repeating the performance of last year is not going to be sufficient.

"The concerns with port trucking are centered around the fact that the mood of truckers at many ports has deteriorated in comparison with last year," said Bingham. "How that translates into future operational impacts is very difficult to quantify but there is no question that the risk of disruptions from port truckers is higher that at the same time last year."

Chief among the trucker concerns cited by Bingham are high fuel prices and the pending introduction of Ultra Low Sulfur Diesel fuel in October, the effects of the United States immigration debate on the trucking industry, and the introduction of the transportation worker identification credential (TWIC) screening for port workers. He also mentioned that there are railroad concerns as well, because rail systems are running tightly without much slack capacity to deal with disruptions.

Going forward, Bingham said it is possible that U.S. container trade will continue to grow to higher levels after 2006, but it will be at a slower rate than in 2005. And this means that shippers and carriers will have to continue to plan for future growth. But, he warned, if infrastructure throughput capacity and freight productivity growth do not keep pace, cost to shippers and their customers will increase, which will make imports more expensive and exports less competitive.

Jeff Berman, Senior Editor
Port Congestion Unlikely Heading into Summer and Fall Shipping Seasons
Logistics Management, June 6, 2006

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