Issue link: https://pma.uberflip.com/i/1495430
Despite record volumes of cargo from Asia that carried over from 2021 through the first half of 2022, the 20-year decline in the West Coast's market share of containerized cargo accelerated, according to new research by maritime economist John Martin, PhD, and commissioned by PMA. The unprecedented cargo surge during the COVID-19 pandemic contributed to a once-in-a-generation backup at the nation's largest port complex in Southern California, the result of a historic collapse of virtually every element in the nation's logistics supply chain. At one point in January 2022, 109 vessels were waiting for a berth at the Ports of Los Angeles and Long Beach. The system-wide supply chain disruption that caused this backup opened the door to accelerated cargo diversion to competing Atlantic and Gulf Coast ports. In the third quarter of 2022, market share losses at the San Pedro Bay ports mounted, according to Dr. Martin's report. Discretionary cargo – cargo bound for inland states, especially east of the Rocky Mountains – is the most susceptible to diversion from the West Coast. "It is difficult to win back lost market share of discretionary cargo," Dr. Martin has said. 20 Years of Market Share Declines The market share challenges for the West Coast have been years in the making. Over the past two decades, Atlantic and Gulf Coast ports have invested billions of dollars in channel and harbor deepening projects as well as intermodal rail projects to accommodate cargo movement to regional distribution centers. To cite just one example, the Port of New York and New Jersey spent approximately $1.6 billion to raise the Bayonne Bridge by 64 feet to allow access for larger container ships. East Coast and Gulf Coast ports enjoy other advantages, according to Dr. Martin's report. They can offer less expensive delivery of Asian cargo to Midwestern states – a longtime destination for West Coast ports. He also cites a shift of key U.S. importers away from China into Southeast Asia, which makes the Suez Canal a preferred trade lane to Atlantic and Gulf Coast ports. Additionally, the growth of e-commerce has created strong demand for port-adjacent distribution centers located near major population centers, which are growing rapidly in the Northeast and Southeast U.S. Supply Sources of U.S. Containerized Imports Source: USA Trade OnLine Share of Imported Asian Containerized Cargo by Port Range Source: John C. Martin Associates, LLC. STAKES ARE HIGH TO REVERSE DRAMATIC MARKET DECLINES AT WEST COAST PORTS 14 14 2022 ANNUAL REPORT