National Ports and Waterways Institute, University of New Orleans

National Ports and Waterways Institute, University of New Orleans

What should U.S. ports expect for 2010 and beyond? I expect a slow transition from recession to recovery in the short term and adjustment to much lower growth rates in the long term — not the “ramp-up” and “catching up with past trends” expected by many in the industry.

U.S. ports have become accustomed to high growth rates. Traffic has grown at multiples of GDP because of a combination of production relocation and containerization.

I expect future growth rates to be equal to and perhaps even lower than GDP growth, or multiples smaller than 1 — with GDP growth itself slowing. I attribute this change first to the relocation and containerization processes, along with some reversals (return to bulk reefer, conversion to bulk in containers and near sourcing, for example); second to the downsizing by U.S. consumers — smaller houses and cars and overall frugality; and third to a change in the GDP composition with services such as health care and education that do not generate much traffic but account for a growing share of GDP.

A fourth reason relates to the supply side — introduction of new terminals (Jacksonville, Tampa, Mobile, for example) and the growing competition within U.S. ports and between U.S. and foreign ports on hinterland traffic. In this respect, it should be noted the Panama Canal expansion will not increase overall traffic, but reallocate it over different gateway ports. Another quick note on the subject: Based on my recent research, I expect only a modest reallocation following the canal expansion.

Less future traffic means less port development, with the latter focusing on expanding capabilities for larger ships more than on expanding capacity for additional traffic. This means riskier future port projects and a call to the private sector to assume these risks. This also means a need for smaller port staff and a painful process of retrenchment for U.S. port organizations.