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San Juan cargo volumes fall 10.8% YOY in FY13
News Is My Business / August 7, 2014

By Larry Luxner

The Port of San Juan ranked 11th among U.S. ports in containerized cargo in 2013, but the same organization that compiled that listing also shows San Juan as suffering one of the sharpest drops in traffic from the year before.

According to the American Association of Port Authorities (AAPA), San Juan handled nearly 1.27 million twenty-foot equivalent units (TEUs) of cargo in fiscal 2013, putting it right behind Seattle and just ahead of Honolulu in total volume. San Juan also saw more cargo business last year than any of Florida’s three biggest ports: Jacksonville, Port Everglades or Miami.

But that 1.27 million TEU figure represented a 10.8 percent drop (or just over 153,000 boxes) from the 1.42 million TEUs unloaded and shipped from San Juan in fiscal 2012. Among U.S. ports, only Seattle showed a bigger drop in cargo traffic (down 16.5 percent) from the year before, said AAPA.

The downturn in traffic at the Port of San Juan is especially surprising, given that cargo volumes nearly everywhere else throughout North America are on the rise.

In 2013, U.S. ports handled just over 44.5 million TEUs, up from 43.7 million in 2012 and 42.7 million in 2011, according to the Virginia-based trade association. Growth has been particularly strong in Philadelphia, which saw traffic jump 34.5 percent in 2013, Long Beach, Calif. (up 11.3 percent), Tacoma, Wash. (up 9.8 percent) and Charleston, S.C. (up 5.7 percent).

The busiest Pacific ports, in descending order, are Los Angeles, Long Beach, Oakland, Tacoma and Seattle, while on the East Coast, volumes are highest at New York/New Jersey, Savannah, Ga.; Norfolk, Va., and Charleston. Along the Gulf Coast, Houston is the cargo leader.

The twin ports of Los Angeles and Long Beach alone account for 32.8 percent of all containerized cargo moving by ocean in or out of the United States, while the Port of New York/New Jersey handles another 12.3 percent of the total.

Yet seaport operators and their private-sector partners, who together plan to invest $46 billion over the next five years in port infrastructure, complain that the federal government isn’t upholding its end of the deal.

“We as a nation have been resting on our laurels for years,” warned AAPA’s president, Kurt Nagle, in a phone interview earlier this week. “Our roads, bridges and tunnels are in deteriorating condition. We’re not even adequately maintaining our channels to the depth and width they’re supposed to be, much less investing to improve them to be able to accommodate the larger vessels that are coming in the near future.”

Interestingly, the Puerto Rico Ports Authority no longer belongs to AAPA, even though it was a member on and off beginning in 1999 and ending in 2005. Similarly, the Port of Ponce was a member from 1999 to 2011, but has not been active since then.

Each year for the past six years, AAPA has held an annual International Trade Routes conference in Tampa — an event at which Puerto Rico usually comes up.

In 2007, Ramón Torres, then executive director of Ponce’s Port of the Americas project, gave a Powerpoint presentation at an AAPA conference on the proposed megaport along Puerto Rico’s south coast. In it, he predicted that the port would eventually handle 1.5 million TEUs per year — which is about what Charleston handles today — though the megaport project never came to pass.

AAPA’s Nagle said that Panama, Brazil, China and Canada are all outspending the United States on a per-capita basis when it comes to port expenditures.

“We are lagging behind,” he said. “On the water side, it’s the responsibility of the U.S. Army Corps of Engineers to maintain the navigational channels leading into and out of our ports. But this has been woefully underfunded for many years, and it’s been getting progressively worse.”

Barely half of the $1.7 billion raised by the federal harbor maintenance tax is actually used for maintenance, he said — a situation he hopes will improve with the Water Resources Reform & Development Act, which President Obama signed into law in June. Among other things, WRRDA gives a green light to 34 water infrastructure projects including one to deepen Boston Harbor and another to enlarge the Port of Savannah.

“Canada has established a very focused program to improve its freight transportation infrastructure to serve North America,” said the AAPA chief. “What need to do here in the U.S. is develop our own national freight transportation policy and strategic plan that will enable us to compete internationally.”

Despite cargo volumes falling by 1 percent in 2013 to around 5.47 million TEUs, New York’s containerized business is up by 3 to 4 percent this year, said Rick Larrabee, director of port commerce at the Port Authority of New York & New Jersey.

“Ships are getting larger and larger,” he said, explaining that ocean carriers can slash the cost of moving an individual container by 25 percent simply by doubling the size of the vessel that container moves on. “A port like New York traditionally sees ships with capacities of 4,500 to 5,500 TEUs. Now we’re seeing ships twice that size, so now instead of a ship coming in and exchanging 2,000 to 3,000 boxes, it’s offloading and reloading 5,000 to 6,000. That ship — which now costs an operator substantially more to operate — is interested in getting in and out of port as quickly as possible.”

Likewise, in 2010, the Virginia Port Authority acquired the rights to one of the world’s most modern container terminals at Norfolk when it signed a 20-year lease with APM Terminals, a Dutch consortium that runs 50 container facilities in 34 countries.

“Last year turned out to be the best year on record, and we think we’re going to break that record in 2014,” said VPA spokesman Joe Harris.

He said the improving economy has boosted traffic by 7.8 percent this year compared to 2013, when Norfolk handled 2.22 million TEUs. That makes it third among all East Coast ports in container traffic, outranked only by New York and Savannah.

“The biggest issue affecting all ports is whether we, as a nation, have the necessary infrastructure to handle the growth. Our volumes are at record levels, and all the ports are extremely busy,” he said, hinting that the $5.25 billion expansion and widening of the Panama Canal — expected to be finished by 2016 — won’t have as big an impact on business as some industry experts have suggested.

“There’s been a misperception that as soon as the Panama Canal expansion opens, a flood of huge ships is going to inundate the East Coast,” Harris said. “The expansion was supposed to have finished awhile ago. They did not, and nobody’s suffering for it. I don’t think it’s going to be the game-changer people think it’ll be. The canal expansion will benefit some ports, but it’ll take time for that to mature.”

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