ANAHEIM, Calif. — The competition among ports in the U.S., Canada and Mexico for Asian cargo is not a zero-sum game, but rather a matter of each port capturing market share based on what it does best.
Prince Rupert, located 500 miles north of Vancouver, British Columbia, on Canada’s Pacific Coast, is North America’s newest gateway to the U.S. Midwest with its intermodal connections provided by the Canadian National Railway. Prince Rupert performs best in handling high-value, time-sensitive cargo moving to Chicago and points along CN’s network.
“Our customers want speed and reliability. That is what our gateway is about,” said Don Krusel, president and CEO of the Prince Rupert Port Authority. Krusel addressed the Transcomp conference sponsored by the National Industrial Transportation League and the Intermodal Association of North America.
Prince Rupert’s entry into the container trade in 2007 indeed has had an impact on U.S. West Coast ports. Last year it handled 410,000 20-foot container units that would have otherwise moved through U.S. ports.
“Prince Rupert has had an impact on us. It sent us a message that shippers have options,” said Chris Lytle, executive director of the Port of Long Beach. The neighboring ports of Long Beach and Los Angeles together handle about 15 million TEUs a year, and the message they are receiving is that customers want state-of-the-art, efficient infrastructure.
“Our strategy is focused on building infrastructure that is second to none,” Lytle said. Long Beach alone is spending more than $4 billion to build larger, automated container terminals, expand on-dock rail yards and improve roadways in the harbor, including a $1 billion project to replace the aging Gerald Desmond bridge.
Mexico is already enjoying a booming cross-border trade with the U.S. While most of the freight to date is domestic cargo moving between the two countries, the growing port of Lazaro Cardenas on Mexico’s Pacific coast provides a direct intermodal link to the U.S. that is provided by Kansas City Southern Railway.
Brian Bowers, KCS’s senior vice president, intermodal, said some importers have begun to route test shipments into the U.S. Midwest via Lazaro Cardenas. As with domestic shipments, he expects the volume to increase. “The message we receive is that Lazaro Cardenas is a new option. We’re starting to see some customers using Lazaro as part of a diversification strategy,” Bowers said.
The two common factors shared by these ports is that their main destination for Asian cargo is the U.S. heartland, and they depend upon intermodal rail to reach that vast market stretching from Chicago to the Gulf of Mexico.
The ports that offer the best value combining price, efficient service and transit time will expand market share in those sectors they are targeting. Jean-Jacques Ruest, executive vice president and chief marketing officer at Canadian National, said CN’s service was “invented” by its customers.
“They’re not buying rail transit time. They’re buying total transit time,” Ruest said. CN works closely with the ocean carriers and terminal operator at Prince Rupert to reduce container dwell time and promote efficient intermodal transfers, with the market determining the price customers are willing to pay for this service, he said.