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Southern California Ports and the Future

As the economy continues its gradual recovery, third party logistics companies should benefit from the increased level of economic activity. On the west coast, there has been lots of discussion about the future volume of goods flowing through Southern California ports. The expansion of the Panama Canal, although delayed at this point, figures to have some influence on goods moving to the United States.

After attending a recent Council of Supply Chain Management Professionals conference on this subject, I came away feeling very positive about the prospects for our major ports (Los Angeles and Long Beach).  Speakers included a representative from the ocean carrier Maersk, a representative from the Port of Charleston (South Carolina), and a representative from the Port of Long Beach. In addition to the massive amount of capital being invested into improvements at the local ports, there is something else in play.  Geography. You cannot change the fact that Southern California is located in the most advantageous position for importing goods from the Far East.  Virtually every alternative discussed during the conference, from the Panama Canal to the Suez Canal, had negative repercussions for the shipper.  Consider the geopolitical risk of the Suez or the fact that most of the larger ships being constructed will not fit through the Panama Canal, you quickly realize that our Southern California warehouse has a promising future in the logistics industry.

There will certainly be a lot more written on this topic.  From my perspective, it is major news when a company like Maersk announces that they will be bypassing the Panama Canal altogether. Who would have thought that was even a remote possibility with all of the money being spent to upgrade that route. The money is already spent for the most part, and now some of the biggest players are writing it off! Amazing. And the decision to switch the route to the Suez, will result in less cost for Maersk but longer sailings for the shipper. A win-win. I don’t think so. The best part is the way for Maersk to make the Panama Canal route viable in the future is with larger ships. The highest capacity TEU ships bring Maersk’s cost per container down. Which is why the trend is toward bigger and bigger ships for all carriers.  However, those ships will not fit through the Panama Canal even after it is widened.

All of this is not lost on folks who run the ports here locally. Big money is being spent to stay ahead of the curve and maintain that competitive advantage.

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