Big ships present a challenge for all ports

Long Beach executive says larger ships will cascade to smaller ports.

   Bigger container ships pose a challenge to all ports, according to Noel Hacegaba, the acting deputy executive director for the Port of Long Beach.
   Hacegaba wrote about the impact of megaships in a white paper available on the website of the American Association of Port Authorities.
   “The rapid pace at which container vessels are growing is affecting the entire supply chain. While beneficial cargo owners have the ability to quickly adjust their business models to accommodate the mega vessels (10,000-plus TEUs), ports — fixed assets with limited resources — are not as nimble. The deployment of these mega ships presents physical, financial and operational challenges that must be met by port authorities across the country.”
   Hacegaba continued, “Even for ports that will not see the mega vessels call at their ports any time soon, the arrival of the larger ships is creating a cascading effect in which the ships being replaced by mega vessels are being deployed in the smaller trade lanes. Thus, the strain of larger vessels has the potential to affect all ports, big and small.”
   He noted that “although 18,000-TEU vessels are the largest in service currently, ships that carry more than 10,000 TEU are still considered large and have limited options with regards to trade lanes and to ports that can accommodate them.”
   He cited an AAPA estimate that that ports around the country are spending $46 billion in capital improvements, with the Port of Long Beach alone spending $4.5 billion.
   The new alliances being formed by container shipping companies “are creating financial uncertainty for port authorities. Carriers that currently call at a particular port may shift their cargo to neighboring ports in accordance with the vessel-deployment strategy agreed upon by the alliance partners. Although this scenario may play out in only those regions where alliance partners call at neighboring ports, the potential consequences for those ports could be considerable.”
   Hacegaba contends that “all of these changes in the industry are leaving ports in a vulnerable position. As a result, the role of the port authority is more important today. port authorities must be able to evaluate how the changes in the industry could impact their port and identify ways in which some of these challenges can be mitigated.”