According to industry experts, due to 76% of the U.S. population residing closer to the East Coast, it is not surprising that more cargo will head there.
Consequently, ocean freight will continue to move from ports in the Pacific to ports on the East Coast of the United States.
John McCown, founder of Blue Alpha Capital, noted that East Coast ports have outperformed Western ports for the 21st straight month in February.
This has been an underlying shift going on for a long time. McCown estimated that from 2000 to 2015, there has been a 57 basis point shift per year from the West Coast to the East Coast. East Coast ports currently handle 57% of U.S. freight, and 43% goes through Pacific gateways.
Gene Seroka, the executive director of the Port of Los Angeles, made a similar point at the recent TPM conference. He noted that the LA/Long Beach port complex handled 36% of all U.S. cargo, which was still significant, but it has been decreasing year-on-year since the turn of the century.
McCown further explained that cargo delivered to West Coast ports often faced long inland journeys to reach their final destination, sometimes using double-stacked trains to travel as far as the Eastern seaboard. “Shipping to the East Coast is the most efficient from a cost, emissions, and congestion standpoint,” he added. However, he agreed that intermodal transportation is still the quicker way to reach the East Coast if speed is essential, rather than the all-water route.
Emily Stausbøll, market analyst at Xeneta, stated that many shippers the company has spoken to indicated that they have investments in warehousing and other infrastructure in the East and would not return to the West Coast.
She added that investments by the government into port infrastructure had been weighted in favor of East Coast facilities, and it is a more structural shift rather than just congestion and West Coast talks. Thus, we should not overestimate how many shippers will return to the West Coast.
Source: The Loadstar