The announcement that Mediterranean Shipping Co. will invest in the Total Terminals International facility at the Port of Long Beach comes barely one month after the port announced that CMA CGM is taking an equity stake in the Pacific Container Terminal that is operated by SSA Marine.
“Two of the top three carriers in the world are at the Port of Long Beach,” Long Beach Executive Director Chris Lytle said Thursday at his annual state of the port speech.
MSC is the world’s second-largest container line, and CMA is the third largest. Maersk Line, the world’s largest container carrier, calls at the APM terminal in the neighboring Port of Los Angeles.
The willingness of the world’s largest ocean carriers to invest tens of millions of dollars in marine terminals highlights the importance of having a home base for their operations at major gateways.
Container lines are betting their future on the ability of ports in North America, Asia and Europe to accommodate vessels with capacities ranging from 10,000 to as much as 18,000 20-foot container units.
“Only a handful of ports can handle these big ships,” Lytle said. Big ships need big marine terminals and deep channels, he said. Long Beach’s main channel has a depth of 76 feet and its container terminals range in size from about 200 to 350 acres.
Although a 50-foot channel depth is considered adequate for container ships, Lytle noted that a large oil tanker with a draft of 65 feet recently called in Long Beach. “We are big ship ready today, and are preparing for the biggest ships of tomorrow,” he said.
Container ships of 10,000-TEU capacity are common today in Long Beach, and some MSC vessels of almost 14,000-TEU capacity have begun calling at the port.
Big ships reduce per-unit carrying costs by several hundred dollars, and the newest ships are quite fuel efficient, saving carriers as much as $30,000 per day on fuel consumption. Carriers last year took possession of about 40 vessels of at least 10,000-TEU capacity, and are scheduled this year to receive another 40 mega-vessels, according to the Paris consulting firm Alphaliner.
The decision by MSC to take an equity stake in the TTI terminal in effect doubles its commitment to Long Beach. Most of the carriers’ operations take place at its proprietary terminal at Pier A.
Since the newest generation of vessels cannot navigate under the GeraldDesmondBridge, MSC’s 14,000-TEU class ships are unable to call at Pier A. The mega-ships therefore call at the TTI terminal that is also the home of Hanjin Shipping Co. Hanjin will also phase 10,000-TEU class vessels into its Long Beach operations, Lytle said.
In addition to building marine terminals, Long Beach will spend almost $1 billion to replace the aging Gerald Desmond bridge with a taller bridge that meets modern seismic standards.
Long Beach is also spending about $1 billion to upgrade its already extensive on-dock rail facilities so that intermodal trains that are 10,000 feet long can be handled on dock. These and other infrastructure projects are part of the ports 10-year, $4.5 billion capital investment program.
Many of the improvements are front-loaded, with work already underway on projects that have a total value of more than $400 million, Lytle said.