Horizon Lines CEO proposes new ocean freight model

Ocean shippers, ports and carriers continue to look for answers to West Coast port congestions

By Dave Hannon -- Purchasing, 4/15/2008 9:11:00 AM

One of the biggest complaints among buyers sourcing and importing goods and materials from Asia is the added time it takes to bring containers through the overly congested West Coast ports in the U.S. But at a marine logistics conference this week, Charles Raymond, CEO of ocean freight carrier Horizon Lines, proposed the creation of an ocean freight system under which smaller, regional ports could provide an overflow “safety valve” and relieve larger ports of the massive container traffic from Asia.

"It is not a question of if our intermodal infrastructure starts to fail but when," Raymond said in the speech. According to a statement released, Horizon Lines is working with maritime unions to design a viable labor model for such a “Coastwise Container Feeder Network.”

Under the plan, “Gateway ports with deep water will serve the large containerships and the primary metropolitan consumer markets,” Raymond says in the statement. “Regional ports will provide the intermodal safety valve served by a network of smaller container vessels..offering fast connections and efficient service to local markets. Inland ports will develop efficient highway alternatives, supporting barge and ferry network.”

Raymond’s plan applies both to the West Coast and the East Coast, where he estimates ports will reach 90% capacity or higher by 2012.

Raymond's suggestion comes as U.S. shippers and importers continue to look more to smaller or non-West Coast ports in an effort to streamline the flow of goods and materials from Asia. As Purchasing.com reported last month, the Port of New Orleans is undergoing a $1 billion expansion. Last week, New Orleans Mayor Ray Nagin was in China to tour a port in Shanghai and said he was considering trying to get Chinese firms interested in the New Orleans expansion project, despite current U.S. laws that prohibit non-U.S. firms from working on U.S. ports for security reasons.

"I think over time you are probably going to see some loosening up of the restrictions,” Nagin told Reuters.

Other ports are also taking steps to offer more realistic alternatives to the Ports of Los Angeles and Long Beach. The Port of Tacoma recently announced it was starting an 18-month pilot program with a sister city Fuzhou, China to improve import/export capabilities.

Tacoma has also reportedly talked with the Port of Seattle about cooperating more, although there is a history of competition between the two ports. Last year, a proposal to combine the two ports was shot down by the Washington State Legislature, but Port of Seattle CEO Tay Yoshitani said in a recent Seattle Post-Intelligencer report that "If you step back and look at the issue from a global perspective, you can see that we're being outflanked to the north by the Canadian ports and to the south by the Southern Californian ports and Mexico. It would make more sense for us to be working together."

According to the Post-Intelligencer, the Vancouver Port Authority this year combined with the Fraser River Port Authority and the North Fraser Port Authority to create the Vancouver Fraser Port Authority so the three individual ports will no longer be competing with each other and undercutting each other's rates, and as Seattle and Tacoma now do.

Mexican officials announced earlier this month they are ramping up plans to build a massive container port 80 miles south of the U.S. border that would be connected to the U.S. by rail and import up to 5 million cargo containers a year. Mexico’s Communications and Transport Minister Luis Tellez told a conference that the port may cost $6 billion to build and could be operational in four to five years.