With SC, East Coast ports booming, California terminals offer bonuses to go west

After years of losing market share to the Port of Charleston and other Southeast seaports, the West Coast is fighting back with ports there offering incentives to shipping lines that can increase cargo volumes.

The move comes as the Charleston port continues to set records for the amount of containerized cargo that moves through its terminals. In September, the port handled nearly 195,000 containers measured in 20-foot increments — the best September in the port’s history and a 12.5 percent increase over last year.

The port has moved 638,600 cargo boxes in the first three months of its current fiscal year, which is 10 percent better than the same period a year ago, according to the State Ports Authority.

“We are excited to see growth across multiple business segments, as well as new customers moving into the market,” said Jim Newsome, the authority’s president and CEO.

The Panama Canal’s expansion in 2015 made it cheaper to send cargo by containerships from Asia to the East Coast instead of dropping cargo off on the West Coast and then moving it by truck or rail.

West Coast ports have seen their market share of Asian imports drop from 72 percent to 64 percent over a five-year period, with most of those imports moving to East Coast ports, according to JOC.com.

This month, the Port of Long Beach started an incentive program that pays carriers $10 for every 20-foot container they bring in that exceeds the port’s annual market share.

For example, if all trans-Pacific cargo to Long Beach increased by 5 percent but a carrier’s increase was 10 percent, the carrier would get $10 for every box that exceeded 5 percent growth.

The Port of Los Angeles began offering a similar incentive program in 2018 and estimates it will pay carriers a combined $6 million to $7 million this fiscal year.

“It’s a market share battle,” Paul Bingham, an IHS Markit Ltd. transportation consultant, told the Los Angeles Business Journal. “They are trying to affect the (carrier’s) decision at the margin.”

The ports see the incentives as another tool to help them stabilize cargo volumes.

“In the end, we’re going for that small portion that’s not committed to one port or the other,” Noel Hacegaba, deputy executive director of administration and operations for the Long Beach port, told the Long Beach Press-Telegram.

Newsome thinks the shift from West Coast to East Coast ports will continue due to population and manufacturing growth in the Southeast.

“The Southeast remains the best place to be in the port business,” he said.

Last month, the Panama Canal Authority took steps to keep increased cargo flowing through its waterway — and away from the Suez Canal — with a “loyalty program” that lowers tolls for shipping lines on a sliding scale depending on the number of containers they haul in a year.