AJOT Insights

PMSA warns about trade impact on ports

Feb 15, 2017

John McLaurin, President of the Pacific Merchant Shipping Association (PMSA), warned that Trump administration trade policies could have a negative impact on U.S. trade and ports.

On February 7th, McLaurin told Propeller Club of Northern California luncheon participants, including officials and customers from the Ports of Oakland and San Francisco, that: “…restrictive trade policies will negatively impact port volumes and result in job losses throughout the supply chain from anyone that touches and moves cargo – to anyone that owns, buys or sells it. The Trump administration trade policy is unknown at this time, but millions of jobs and the economic health of public port authorities, local, regional and state economies are at risk.”

The Pacific Merchant Shipping Association (PMSA) represents owners and operators of marine terminals and U.S. and foreign vessels. It focuses on regulatory and global trade issues.

McLaurin noted California ports, which have just recovered from declines during the Great Recession, now face new challenges: “While cargo volumes in 2016 brought California’s container ports to levels just shy of their all-time peaks of 2006 – which was a ten year climb out of the depths of the Great Recession – what is uncertain are the trade policy impacts of the new Trump administration and their impacts on cargo volume.”

McLaurin said that California ports are also at risk due to the changes underway within the maritime industry: “The maritime industry is evolving – quickly. Ocean carriers are consolidating – with more on the horizon. In 2016 we saw two Chinese lines merge; CMA purchased APL. In 2018, three Japanese ocean carriers will become one – which will also impact multiple marine terminals in California. In addition, we have witnessed bankruptcy filings in the past twelve months, both for marine terminals and ocean carriers. Here at the Port of Oakland, we used to have eight terminal operators – we now have four. In Seattle, the APL terminal, T-5, sits empty. There is speculation about the fate of several other terminals in Seattle and San Pedro.”

There is also concern about the new ocean carrier alliances and which ports will be winners and which will be losers: “Come April of this year, new vessel alliances will take shape and port rotations will be finalized. The realignment of four vessel alliances into three is the latest effort by the shipping industry to cut costs.”

McLaurin said the trans-pacific shipping market will give Chinese carriers the lead:

  • The Ocean Alliance (China Cosco Shipping, Evergreen Line, CMA CGM, and OOCL) market share will be approximately 40%
  • THE Alliance (NYK Line, MOL, “K” Line, Hapag-Lloyd, Yang Ming Line) will have a 27 % share.
  • 2M Alliance (Maersk, MSC, Hyundai) will have 20%.

McLaurin said the big unknowns now are: “What size vessels, frequency and schedule will be deployed to which ports and terminals is unknown at this point. One of my members described the anticipated deployments and port and terminal choices as a game of musical chairs.”

Adding to this uncertainty, “California ports face environmental requirements that are not found …by any other port gateway in North America. Please note the following mandates faced by California’s ports – and all of us in the supply chain:

  • By 2030, California will reduce greenhouse gas emissions by 40% below 1990 levels, and reduce greenhouse gas emissions 80% by 2050;
  • By 2030, California is to increase from one-third to 50% its electricity derived from renewable sources;
  • California will reduce petroleum use in cars and trucks by up to 50% by 2030;”
Author Photo
Stas Margaronis
American Journal of Transportation