Utilisation of vessels running from Asia to West Coast North America (WCNA) has remained above 90% this year, but negligible volume growth prospects, mostly due to migration of cargo to gateways lying east of the Panama Canal, has caused rates to fall, according to London-based shipping analyst Drewry.
Back in the first half of 2012, imports from Asia handled at American ports along the western seaboard represented 72.5% of all Asian cargo shipped to the U.S. Three years later, and that proportion has reduced to 67%. On an annualised basis, today the WCNA ports are handling some 275,000 TEU of additional Asian imports compared to three years ago, whereas the ECNA facilities are attracting 1.2 million TEU of incremental volume.
Throughput results for August at the West Coast ports have, however, bucked the trend. But this rebound in the fortunes of the USWC ports is not because importers have short memories or that they have been entirely forgiving of the chaos that arose from the ILWU/PMA dispute earlier in the year, but is more a function of the peak season which takes place in the third quarter.
One of the essential requisites for this seasonal cargo is a fast transit time, and the West Coast ports – especially Long Beach and Los Angeles – have little competition in that respect, according to Drewry.
The terminals along the U.S. western shoreline are now more or less working normally, thus between August and October the West Coast ports may claw back their share.
But the longer term trend – with the widened Panama Canal due to open in April next year – is for more cargo to migrate to the East, Drewry predicts.
In the last seven months, the differential between USWC and USEC rates has averaged some USD 1,800. By the end of September, however, the gap had reduced to no more than USD 1,000 which is probably the smallest it has ever been.
Lower utilisation on the USEC loaders is one factor why rates to the East Coast have fallen more sharply; at the same time, the carriers are probably intent on lowering the differential in a bid to lure more West Coast importers to switch to an East Coast Bill of Lading.
With all the factors mentioned above, Drewry expects further migration of cargo to the East Coast in the run-up to the opening of the widened Panama Canal.