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October 22, 2008

Drewry sees trend away from West Coast ports

After years of dominating U.S. maritime trade, the intermodal route using the major U.S. West Coast port gateways and rail links with the U.S. interior is coming under threat, according to a logistics white paper published today by Drewry Supply Chain Advisors.

While the recent decline of import container volumes to the U.S. West Coast looks like the natural result of the credit squeeze, several factors have combined to undermine the position of America's Pacific Coast ports, "not least the complacency of the inland transport providers," says Drewry/

Drewry says that users of the U.S. rail system have faced a dramatic reduction in the total size of the system, even though railroads have increased their investments in recent years.

"Faced with a tightening market and rising demand, the railroads have chosen to up their prices rather than invest in significant more capacity, in the mistaken belief that they had a captive market," said Philip Damas, director of Drewry Supply Chain Advisors.

Drewry Supply Chain Advisors, a division of Drewry, analyzed the end-to-end transport costs of containers shipped to and from U.S. interior points via the West Coast and East or Gulf Coast, and the expected fall in vessel-related costs post the enlargement of the Panama Canal in 2014/15. For many destinations in the eastern U.S., the route via the West Coast ports is now much more expensive than the route via East Coast and Gulf Coast ports.

Drewry also notes the development of Suez as a route for South East Asian cargo.

"Intermodal costs are certain to keep rising, while all-water costs will continue to fall, which means that the 'land-bridge' route will become less economic than the all-water route except for very time-sensitive goods," Damas comments.


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