Trends that are turning global supply chains on their heads will accelerate this year. Here are some contributing factors, some not obvious now, that will increasingly determine winners and losers, cause exporters and importers to rethink their supply chains, and force ports and carriers to quickly adapt or become irrelevant.
— China's economic growth continues to outpace the rest of the world — its current "slow" growth (6 percent annually) is three times that of ours. China’s appetite and ability to pay for U.S. exports of farm, food and fiber products will accelerate.
— Consumer goods production, stimulated by anticipated market-opening of the Trans-Pacific Partnership, continues to migrate from China to Southeast and South Asia.
— U.S. manufacturing growth, including additional auto plants, will occur almost exclusively in the "right to work" states of the Southeast.
— The western Class I railroads will increasingly focus investment and capacity on highly profitable carriage of oil and coal from the Midwest to West Coast ports, to the detriment of traditional agriculture and other westbound cargoes. The pressure on westbound rail capacity will increase as the U.S. will lift the long-standing ban on exporting oil.
— Continuing uncertainty as to labor dependability, cost and restraints on automation will motivate importers, exporters and carriers to seek alternative gateways to U.S. West Coast ports, including Canadian, Mexican, and all-water routes to U.S. East Coast ports.
— The U.S. West Coast port competitive advantage of four naturally deep-draft ports will be lost as current infrastructure investment will bring five or six East Coast ports on line to serve the largest container ships by 2018.
— Trucking hours-of-service and other “safety” regulations will continue to drive up trucking costs, providing advantages to ports and exporters in regions that can utilize “heavyweight corridors.”
Peter Friedmann, Executive Director, Agriculture Transportation Coaltion