Currently the ports Los Angeles and Long Beach are involved in a 10-year, $1.3 billion and $4.5 billion (for the latter) program to expand their cargo-holding capacity as well as improve their logistics efficiency. The issue on the table is how to handle the predicted increase in volume that “new-age” terminals will produce in the future with the arrival of modern era mega-ships. With the increased logistics technologies in these ports such as quay cranes, vertical/horizontal transport systems, and stacking cranes, the potential for an increase in container traffic is most certainly there. Last year Los Angeles’ seven container terminals handled 7.9 million TEUs, while Long Beach handled 6.7 million, first and second respectively in terms of volume in North America.
However, with an unknown increase in container traffic it’s been said that recently initiated Executive Director of the Los Angeles port, Gene Seroka, as well as other managerial powers, are concerned with the allocation of their large financial budget. Funds are being spent on increasing the capacity of the current terminals to hold more containers as well as reducing the congestion that is currently overshadowing the industry. With the predicted increased volume at these joint ports, a future improvement to the operational efficiency, productivity, and infrastructure is required.
In conclusion, the higher-ups are taking a “tread lightly” approach to this expansion project while terminal volume projections remain theoretical.
Major container carrier companies Cosco Container Lines Company Limited, Kawasaki Kisen Kaisha, Ltd., Yangming Ltd., Hanjin Shipping Company, Ltd., and Evergreen Line Joint Service have submitted a request to the Federal Maritime Commission to form the CKYHE Discussion Agreement. These five carriers have been operating with great success in foreign trades not involving the United States.
The discussion would consist of the carriers strategizing how to imitate the success they have experienced in the foreign market. If the FMC grants this motion, the CKTHE alliance will be given authority to agree upon organizational and departmental cooperation within the bounds of the Shipping Act of 1984. This means they will not be able to collaborate or coordinate competitive rates given to their customers, which would be highly unethical.
The discussion will take place on July 6, 2014 if the request is accepted by the FMC.
On March 24th, 2014 an agreement between A.P. Moller-Maersk, CMA CGM, and Mediterranean Shipping Company was passed by the Federal Maritime Commission (FMC), which allowed the aforementioned parties to share vessels between themselves as well as coordinate with each other in relation to operating activities. The three carriers involved intend to pool their resources together and take advantage of the sanction given to them halfway through the current year.
The FMC allowed this agreement to take place based on the theory that it is unlikely that this affiliation between carriers will cause “an unreasonable reduction in transportation service or an unreasonable increase transportation cost”. In fact, the Federal Maritime Commission believes that this new compliance between carriers will benefit the U.S. consumer. Although, the FMC are being very cautious in the sense that the arrangement between these parties may not be what they think it is, nevertheless, they assure the public that the agreement will be closely monitored.
On April 24th, 2014 the Federal Maritime Commission unanimously agreed to allow the G6 Alliance, which consists of companies APL, Hapag Lloyd, Hyundai Merchant Marine, Mitsui OSK Lines, Nippon Yusen Kaisha, and Orient Overseas Container Line, to partake in the sharing of vessels and the coordination of transportation operations.
The specifics of the arrangement between these vessel operators are as follows: the G6 Alliance are allowed to share 180 to 220 ships that may hold a maximum of 14,000 20-foot TEUs. The new agreement also goes into detail about the implementation of G6 Service Centers (GSC), the purpose of which are to increase the overall capabilities and operational services pertaining to the alliance.
Chairman of the FMC, Mario Cordero stated that, “This Alliance will considerably increase available capacity in the expanded geographic scope, and has the potential to generate operational efficiencies and positive environmental benefits.” An analysis has been conducted by the Commission’s staff in an attempt to accurately predict the effects of the G6 Alliance Agreement on the shipping industry. The commission also intends to closely monitor the impact that the global alliance has on the industry.
Top 5 Cities for Global Trade
1. Houston, Texas
$104.5 billion (2011 export total)
Anyone doubting the local effects of global trade need only look at Houston. Owing to its leadership role as a producer of petroleum and coal products - which makes up a third of its exports - the city produced a robust 29.6 percent growth in 2011, more than $23 billiion.
2. New York, New York
$105.1 billion (2011 export total)
The benefits of international trade are nothing new to New York, where oneout of every 10 private-sector jobs is with a foreign company. Half of China’s 32 largest companies that do business in the U.S. have headquarters in and around New York.
3. Los Angeles/Long Beach, California
$72.7 billion (2011 export total)
When Combined the Ports Los Angeles & Long Beach rank at #7 in Volume in the worlds ranking at 14 Million TEU (2011 Figures). In Regards to Los Angeles / Long Beach Exports Mexico represents 24.3 percent of all exports and China, Hong Kong, and Japan take another 23.9 percent.
4. Miami, Florida
$43.1 billion (2011 export total)
If you plan on doing business in Central or South America, chances are you’re going to have to go through Miami.
5. New Orleans, Louisiana
The big Easy’s origins in the early 18th century are a product of the optimum location as a trading port. Indeed, the Port of New Orleans is the fifth largest in the U.S. based on volume of cargo handled and the Port of South Lousiana, aslo based in New Orleans, is the world’s busiest in terms of bulk tonnage, Exports from New Orleans - bound for such major trade destinations as China ($3.6 billion), the Netherlands ($2.1 billion) and Singapore ($1.9 billion) - account for 62.5 percent of Lousiana’s maerchandise exports.