After building the nation’s largest terminals and dredging the deepest harbors, West Coast ports are facing a problem they are not used to — overcapacity.
“We’re well down the road to overcapacity,” said Alan McCorkle, senior vice president in Los Angeles for APM Terminals. West Coast terminal operators are operating at 20 to 30 percent below full utilization, McCorkle told the California Maritime Leadership Symposium in Sacramento.
Ten years ago, when outsourcing of manufacturing to China was at its peak and container volumes were increasing at 10 to 15 percent a year, West Coast ports faced a capacity shortage. Los Angeles and Long Beach, in particular, appeared destined to reach their capacity limits by around 2012.
In the ensuing years, shipping lines placed orders for hundreds of large vessels that need a harbor depth of at least 50 feet, large backland areas for container storage, and big cranes — lots of big cranes, McCorkle said. APM works its biggest ships with as many as eight cranes, compared with five cranes for smaller vessels.
West Coast ports did the right thing for the time. The ports and their terminal operators expanded their facilities and deepened their harbors with a “build it and they will come” mentality. They were right. Vessels with capacities of 8,000 20-foot-equivalent units are common now on the West Coast. In Los Angeles-Long Beach, 10,000-TEU ships are frequent visitors, and MSC is operating 13,000-TEU ships in Long Beach.
Ed Zaninelli, vice president of trans-Pacific westbound at Orient Overseas Container Line, said OOCL believes 13,000-TEU-class vessels will be the right size for the Middle Harbor expansion project under way in Long Beach.
Middle Harbor exemplifies a level automation that some operators believe will be needed to efficiently handle the vessels of 13,000- to 15,000-TEU capacity that will likely be the workhorses of the trans-Pacific trade in the next five to 10 years. Middle Harbor will feature dual-hoist cranes, automated (driverless) guided vehicles and automated stacking cranes.
Automation will be necessary as terminal operators densify their operations and carriers demand that their $150 million ships are turned in no more than three days. This high degree of automation requires a huge investment — hence the $1.5 billion price tag that Orient Overseas Container Line will incur to build and equip Middle Harbor and make its lease payments to the Port of Long Beach.
However, while carrier investments in big ships are forcing terminals to build larger, more efficient facilities, it is also leading West Coast ports into a new era of overcapacity. Middle Harbor, for example, will have a full build-out capacity of 3 million TEUs per year. Last year, the entire Port of Long Beach handled 6 million TEUs.
There are 14 container terminals in Los Angeles-Long Beach. In addition to Middle Harbor, TraPac and APL have announced plans for automated facilities. Long Beach is preparing the final environmental impact report for Pier S, a greenfield site that will most likely house an automated terminal, because it is easier to build in automation from the ground up, as opposed to retrofitting an existing, working terminal.
To prevent overcapacity from becoming a glut, West Coast terminal operators will most likely automate their facilities only to the degree that fits their individual needs. APM, which already has experience with an automated terminal that it built in Portsmouth, Va., (which it no longer operates), will probably not bring the same degree of automation to its 440-acre Los Angeles terminal, McCorkle said.
APM is looking at having a “Virginia light” level of automation that will feature primarily high-speed electric rubber-tire gantry cranes, but it will not duplicate other features from the Portsmouth facility, McCorkle said.