The United Nations Conference on Trade and Development and the World Trade Organization expect the world’s seaborne trade to remain at around 2 percent annual growth rate for the near future. This low growth, or better defined as stagnation, will likely include the US, traditionally a faster grower, following the push by the new Trump administration for repatriation of production and, especially, restrictions on free trade. The stagnation in trade will further the restructuring process in the shipping industry, increasing market concentration, with alliancing giving way to full M&A. The concentration, and related agglomeration of traffic, will provide for further construction of larger ships of 20,000-TEU capacity, some of which, eventually, will be deployed on Asia-US routes.
It is reasonable to assume that the stagnation in overall trade also will be followed by stabilization in shipping lines’ service patterns, once the jolt of the Panama Canal expansion is fully absorbed. My guess is that the canal expansion will not significantly impact the West Coast-East Coast allocation of Asia-US imports, remaining at 70-30. Its main impact will be to reverse the Panama-Suez allocation in the Asia-US East Coast trade from 40-60 to 60-40. I also do not foresee big shifts in ports’ market shares within each coast.
Facing stagnation in trade, US ports will have difficulty justifying the huge investments required to expand their infrastructure and, especially, construct new terminals. Claiming a need to accommodate larger ships will not hold sway since the 20,000 ships can definitely be operated partially loaded, as already practiced worldwide. Claiming a need to capture market share also will not win support in light of the expected stability in market share. In any event, constructing new terminals will become cost prohibitive in the era of dwindling public money because of the Trump administration’s reliance on private financing for infrastructure.
Additional port capacity can be created at a much lower cost from existing port infrastructure: consolidating smaller terminals to achieve scale economies, adding shore cranes to increase berth productivity, deploying higher yard cranes to increase storage capacity, automating equipment and gate processing to increase working hours, and enhancing road and rail connectivity to ease landside congestion.