A Shift from the West: The Growing Popularity of East and Gulf Coast Ports
The storyline is a familiar one: When Americans stuck inside due to the constraints of the pandemic started pulling out their credit cards and shopping online, ecommerce exploded—as did the sudden demand for imports from Asia.
Although additional factors played a role, this surge in traffic headed to U.S. West Coast ports led to unprecedented levels of congestion and skyrocketing shipping rates that left beneficial cargo owners (BCOs) with seemingly limited options to manage their supply chains in a manner that resembled anything like business as “normal.”
However, as these dynamics created growing levels of frustration along western shores, East and Gulf Coast ports started calling attention to the options they provide for shippers eager for more reliable solutions.
As Barry Parker noted in an article for gCaptain last month, “Sometime around early October, the ports in Florida, spearheaded by a reinvigorated Florida Ports Council (FPC), began strutting their stuff- encouraging cargo owners to shift their business from the U.S. West Coast over to ports in the Sunshine State. This blitz of media outreach is bearing fruit.”
In the following ABC Action News video from October 21, 2021, Mike Rubin, President and CEO of the FPC discussed some of the dynamics involved.
In his article, Parker cited January 2022 data from The McCown Report, which he said described December 2021 as “the highest volume month ever for East/Gulf Coast ports.”
Authored by shipping expert John D. McCown, the report described several factors playing a role in the shift from the West: “January was the eighth straight month where overall growth at the East/Gulf Coast ports exceeded overall growth at the West Coast ports, a reversal of the initial experience when the pandemic-induced spending on tangible goods began. The stronger relative performance of the East/Gulf ports recently continues to be driven by shippers changing routing decisions to avoid the widely reported West Coast congestion.”
McCown reported that over three months ending in January, “East/Gulf Coast ports increased 11.4% compared to a 6.6% decrease at West Coast ports.” He also described the “stronger performers” and “weaker performers” during both that time period and over the last 12 months.
Over the three months ending January:
“Stronger performers” : Charleston (up 28.5%) and Houston (up 23.9%).
“Weaker performers” : Los Angeles (down 10.8%) and Seattle/Tacoma (down 4.9%)
Over the last 12 months:
“Stronger performers” : Houston (up 27.4%) and Charleston (up 26.8%)
“Weaker performers” : Oakland (up 7.6%) and Los Angeles (up 13.4%)
McCown isn’t alone in his assessments. In a January 11, 2022 post, “East, Gulf Coast ports smash records in 2021,” Freightwaves referred to 2021 as a “banner year” for East and Gulf coast ports. Specifically, the publication highlighted volume increases as follows:
Port of Virginia—YOY increase of 25.2%, with December 2021 being “the most productive month in history.”
South Carolina Ports—Handled “an ‘unprecedented amount of cargo’ in 2021” with the Port of Charleston experiencing a “19% increase from 2020 and a 13% increase for 2019. SC Ports also achieved year-over-year container records for 10 consecutive months, from March to December.”
Port of Mobile—"Containerized cargo volumes increased nearly 19% to a record 502,623 TEUs in 2021, according to the Alabama Port Authority.”
Not a New Trend
Although West Coast ports have been in the spotlight over the past few years due to the congestion there, historical data suggests that the shift to the East is nothing new.
Within his description of the dynamics impacting the recent increased volume at East/Gulf Coast ports, McCown noted that “a subtle but consistent underlying coastal shift continues resulting from reduced linehaul costs of moving such containers in all or more water vessel service compared to cross country intermodal service via the West Coast.” Referencing a graph in the report that shows port data trends since January of 2017, McCown notes a “relative shift away from the West Coast since 2016…”
The expansion of the Panama Canal likely had a lot to do with it, since the improved version with the ability to service bigger container ships opened for business in June of that year.
Planning Pays Off
In addition to the need for alternatives to congested West Coast ports, the boom at East and Gulf Coast ports is also possible because of the planning and investments being made there.
An August 2021 Freightwaves article detailed such efforts at U.S. Gulf Coast ports, largely due to the Panama Canal’s expansion. To handle the anticipated change in shipping traffic, ongoing upgrades to various ports include deepening and widening channels—as well as adding the wharfs and equipment needed to service bigger ships. Along with Port Freeport in Texas, the article noted that “Ports from Brownsville, Texas, to New Orleans, to Mobile, Alabama, are expanding and will spend about $5.4 billion on expansion projects by 2027.”
In “U.S. Ports Update 2020: All hands on deck,” Logistics Management provided an overview of additional port upgrades on the East and Gulf Coasts, including:
Boston: “…recently received a $20 million Department of Transportation grant for terminal and roadway expansion.”
New York/New Jersey, Baltimore, and Norfolk "have all recently completed—or nearly completed—dredging and dock expansions. In NY/NJ the most dramatic change for the non-shipping public was the raising of the Bayonne Bridge in New Jersey. The project to raise the navigational height of the 151-foot-tall bridge to 2l5 feet was completed in mid-2017.”
Charleston “has begun a dredging project that will deepen its harbor to 52 feet at mean low water (MLW) over the next four years to six years.”
To address anticipated space constraints at South Carolina’s Port of Charleston and Georgia’s Port of Savannah, the two states “have agreed to a $4.5 billion multi-year joint project to build the largest single land port in North America. This is on top of a current $1.2 billion port expansion at Georgia Ports Authority-Savannah that will double capacity for cargo handling and rail access at the existing site.”
Inland ports are also being developed “to rapidly process the large numbers of containers flowing as a result of larger ships.” One example cited is Inland Port Greer, owned and operated by the South Carolina Ports Authority (SCPA).
Port Economics, Management and Policy offers additional details about past, current, and planned port improvements on the East and Gulf Coasts in “Main East and Gulf Coasts Port Infrastructure Developments Associated with the Expansion of the Panama Canal.”
Describing the expansion at the Port of New Orleans (Port NOLA) to Freightwaves, port spokeswoman Jessica Ragusa summed up what may be the sentiment of many port leaders along the East and Gulf Coasts: “The business is ours to lose to other states if we don’t provide the infrastructure necessary to compete in the future.”