The dominant theme in container shipping for 2016 and the rest of this decade will be the deployment of large container ships to U.S. ports in what is clearly a slowing trade growth environment.
By the time the Bayonne Bridge is raised in 2017, 13,000-TEU ships will be deployed to the U.S. East Coast ports. Ports are rapidly investing to catch up to this large ship trend by deepening their harbors, improving existing facilities, and building new terminal infrastructure where land is available and permits are received.
These investments are key to maintaining the reliability in container shipping that is so vital to global supply chains. Publicly owned ports historically have not earned a proper return on capital relative to the large investments required. States and cities have been able to augment these requirements through selective infrastructure grants, but these are increasingly difficult to attain in the public sector where infrastructure needs are great to support growing demands on all modes of transport.
If these investments are to be successfully completed, U.S. ports must focus on adjusting their revenue and operating models to ensure that a representative return on capital is earned. This can only be done through ensuring that maximum efficiency is achieved in terminal operations, that existing terminals are optimally configured to allow the densest utilization, and, in some cases, revenue is enhanced to generate sufficient operating earnings. Where ports share a common market or hinterland, cooperative approaches may be a required component of achieving this outcome.
The next five years will be decisive in determining if U.S. ports are up to the challenge.
Jim Newsome, President and CEO, South Carolina Ports Authority