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'No way' mid-size shippers can shift cargo to US east coast ports: study

2015/9/21 11:10:44      Push:
MAKING the Asian cargo switch from the US west coast to the east coast will result in 2.5 - 5 per cent increase in cost, says Stephen Craig, managing partner of enVista, the supply chain consultancy that crunched the numbers.

"There's no way in hell" that mid-size shippers will make that switch, Mr Craig told a panel at the Ohio Conference on Freight in Cincinnati.

Network modelling by Indianapolis-based enVista showed companies an increase in costs by moving shipping all-water to the east and using new distribution centres, motor carriers and other service providers, he said.

The shift may make sense for big shippers fearing west coast congestion and disruptive labour disputes, he said, reported American Shipper.

"We got some bigger clients for who the risk is so high that it strategically it makes sense" to diversify gateways "because they are a bigger piece of the chain and when they go to make a tactical response the capacity is not going to be there," said Mr Craig.

But the last port shutdown on the west coast was 12 years ago, so it doesn't pay to build in flexibility for a once-a-decade event when an importer can make tactical adjustments when needed that are dramatically less expensive, Mr Craig said.

But east coast ports like Savannah and to a lesser - but increasing - extent Charleston, have reported growing Asian imports long before west coast labour problems erupted. 

East coast proponents point out that 80 per cent of America consumers live east of the Mississippi River Valley - where most cargo wants to go, and keeping it on the water is cheaper than paying for overland rail journeys from the west coast.