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US seaports: how to avoid congestion in the future?

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  1. Executive summary
  2. Background
  3. Factors to determine alternative ports
    1. Sea transportation
    2. Port and area infrastructure
    3. Lead time
    4. Costs
    5. Factor relevance
  4. Alternative ports available
    1. Northwest Ports: Vancouver, Seattle and Tacoma
    2. Californian alternatives: Oakland and San Diego
    3. Mexican ports : Ensenada, Lazaro Cardenas and Manzanillo
  5. Recommendations
    1. Short term
    2. Long term
  6. Appendices

The continuous increase of port congestion in the San Pedro Bay is pushing every day more importers to relocate the port of entry of their goods. However, both ports of Long Beach and Los Angeles provide facilities and service that can not be found in any port. This reports first aims to present a study of the different relevant factors to be considered when considering alternative ports by an importer/exporter of products currently using these 2 ports. It secondly lists and assesses the possible alternate ports according to these requirements.

4 factors have been highlighted:
1. Sea transportation, taking into account the effects of the shipping lines available at the port.
2. Port and area infrastructure, which assess the facilities and services required.
3. Lead-time, from China (major importer for these ports) to terminal dispatch.
4. Costs

The research then proposes 3 different areas where the imports can enter the continent: the Northwest Coast, the secondary ports of California, and Mexico.
The Northwest Coast ports (Vancouver, Tacoma and Seattle) provide good sea transportation, and are the closest ports from China. Being fairly large, these ports provide good infrastructures and service levels. However, the lead time is subjected to decrease if the consumption of the imported good is not in the Southwest for areas such as the East Coast or Midwest. The possible cost reduction will depend on the industry and the market in which the company operates.

In California, being fairly close to Los Angeles-Long Beach ports, Oakland and San Diego are natural alternatives to be considered. The switching costs may be smaller than relocating to the Northwest, and the move relatively easy. Some of the potential distribution centers in the Los Angeles area may still be kept under these options.

Mexican ports are increasingly being considered as real alternatives to Los Angeles port congestion. Still a relatively small port, Ensenada is expected to grow significantly, being ?at the door? of the United States. The largest Mexican Pacific port, Manzanillo, although being further provides good equipment and services. Lazaro Cardenas results to be more appropriate to serve the Mexico City area.

The research concludes by giving some short and long term recommendations. In 2005, the Los Angeles Port Authorities only decided to increase the off-peak use, by offering discounts at these hours. However, companies know that this temporary adjustment may not be sustainable in the long run. Imports from Asia are expected to continue to grow at a significant rate and since areas of extension are rare in the San Pedro Bay, a relocation decision seems to be inevitable.

[...] (See Appendix 1 Worldwide Container Traffic Figures Graphs[2]) This increase in trade from China had a clear effect in congestion during the peak season (late June to November) in Los Angeles Port in 2004. Major shortages in labor and infrastructure to meet the Port's demand were the major cause of this congestion. According to Yvonne Smith, the major causes of the 2004 Los Angeles port congestion were[3]: 1. Labor shortage: port part time workers had fallen to 3,700 in 2004 after having 6,000 workers in 2000. [...]


[...] However, the lead time is subjected to decrease if the consumption of the imported good is not in the Southwest for areas such as the East Coast or Midwest. The possible cost reduction will depend on the industry and the market in which the company operates. In California, being fairly close to Los Angeles-Long Beach ports, Oakland and San Diego are natural alternatives to be considered. The switching costs may be smaller than relocating to the Northwest, and the move relatively easy. [...]


[...] Other actions have been taken also such as hiring more workers to unload intermodal containers for the LA port.[15] Several actions were taken in 2005 so that the 2004 congestion would not be repeated. These actions included: 1. Hiring of 4500 part time workers to complement a workforce of 8,600 already in the LA Port The PierPASS program to create an incentive to use off peak hours for unloading Promoting the use of on-dock rail to reduce traffic congestions Investments by railroad companies: BNSF $ 1.9 billion in equipment, employees and track and UP has hired 5,550 employees system wide, more hiring of conductors and having 40% of their road doubletracked with a forecast of 60% for 2007. [...]

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