BNSF Railway intermodal executive Fred Malesa does not believe West Coast ports will lose much market share in the Asian trade when the Panama Canal widening project is completed in late 2014.
In fact, if West Coast ports and the western railroads continue to make large investments in infrastructure and service enhancements, Malesa predicts they may even regain some of the share they lost to East and Gulf Coast ports since 2002.
“The West Coast is the best coast, and the best is yet to come,” Malesa, vice president of international intermodal at BNSF, told the Los Angeles Transportation Club Tuesday.
Retailers and other large importers before 1992 shipped 80 percent of their imports from Asia through the West Coast. Their market share dropped to 70 percent after the employer lockout of longshoremen closed the ports for 10 days, and the port haven’t been able to regain the loss market share since.
Even though the canal project will allow vessels up to 12,500 20-foot equivalent container unit capacity to call directly at East and Gulf Coast ports, Malesa said he does not see those ports increasing their market share further. “The shift that was going take place has happened,” he said.
West Coast ports already regularly handle vessels of 8,000 to 10,000-TEU capacity. With carriers beginning to deploy 15,000 to 18,000-TEU ships in their Asia-Europe services, it is logical that ships of that size will eventually call at West Coast ports.
They won’t call at East Coast ports, though, because of draft limitations at the ports, and furthermore, they will be too big even for the enlarged canal, he said.
Add to those economies of scale the shorter transit times to the West Coast – as much as 10 days shorter than the all-water services to the East Coast – and West Coast ports should at minimum retain their existing market share after 2014, Malesa said.
BNSF and Union Pacific Railroad are doing their part to make West Coast ports more competitive by double-tracking their main lines to the Midwest and by building large rail logistics hubs that attract retailer import distribution centers in key inland destinations such as Chicago, Dallas, Memphis and Kansas City, he said.
West Coast ports already handle 90 percent of the containerized imports from Asia that move via intermodal rail to inland destinations. Eastern railroads are expanding their intermodal corridors to the Midwest in anticipation of 2014. However, the longer ocean transit from Asia, plus the rail move from East Coast ports to the Midwest, mean that West Coast ports will continue to have a significant transit time advantage when serving the nation’s interior, Malesa said.