“Being and Nothingness” – A Riff on Empty TEUs

By Jock O’Connell

Apologies to Jean Paul Sartre for borrowing the title of his 1943 phenomenological essay on ontology which the Jesuits at Holy Cross a half a century ago deigned I should read. But, really, pity the poor empty container. Essentially, each is a small tragedy, an opportunity lost, a space filled with, well, nothingness. And, certainly, with a lot less recyclable scrap than was the case a year ago.

Of late, the volume of nothingness at U.S. seaports has been growing at rates often exceeding the growth in loaded containers. As Exhibit 7 attests, traffic in contentless containers has been especially brisk at the nation’s leading maritime gateways.

Last year, for example, the Port of Los Angeles, North America’s busiest container seaport, handled 9,343,193 TEUs, a record high for the Southern California gateway. That was a 19.3% (+1,511,291 TEUs) increase over 2010, the year in which the port (like others around the country) started to regain its footing after the Great Recession cratered maritime trade volumes. Yet nearly half of that growth in container traffic at LA came from the additional 710,474 empty TEUs the port was handling. In fact, from 2010 through 2017, empties increased by 35.2%, while loaded TEUs rose by just 13.8%.

The story was similar next door at the Port of Long Beach, America’s second busiest container seaport, which also achieved its all-time high in total TEUs last year. But, while the 7,544,507 TEUs the port handled was 20.5% higher than in 2010, the increased traffic in empty boxes (+638,565 TEUs) very nearly matched the growth in loaded containers (+642,443 TEUs). Closely paralleling the experience of its neighbor, loaded container volumes at Long Beach grew by 13.7% from 2010 to last year, while empty containers jumped by 40.6%.

What was happening at the two San Pedro Bay ports was mirrored by the nation’s third busiest container port, the Port of New York/New Jersey. Last year, the East Coast’s principal container port handled 6,710,817 TEUs, an increase of 21.9% over 2011 (the earliest year in which loaded and empty containers were reported separately by that port). Empties were largely responsible for the increased business, growing by 700,494 TEUs while the number of loaded containers rose by 506,837 TEUs. The disparity in percentage gains is even more remarkable. Between 2011 and last year, traffic in empty containers at PNYNJ expanded by 58.5% as opposed to just 11.8% for loaded boxes.

Such was not always the case. In 1980, empty TEUs represented a meager 9.9% of the 3,685,800 TEUs that moved through U.S. ports that year. Even more notable, in light of subsequent developments, was that only 4.4% of outbound TEUs were empty, while 18.8% of inbound TEUs were lacking content. But 1980 was also a year in which 59.2% of the nation’s container trade was still outbound.

By the turn of the millennium, the contours of U.S. containerized trade had undergone major alterations. By 2000, inbound traffic had grown from 40.8% to 61.8% of two-way trade, a share that, by last year, had swelled to 64.1%.

For the nation’s very largest maritime gateways, the growing imbalance between loaded and empty containers has closely tracked growth in the U.S. merchandise trade deficit. And as we import substantially more than we export, only a very small percentage of inbound containers turn up empty. The challenge is to find something profitable to do with the surplus boxes, a challenge that has lately been exacerbated by the sharp cuts in overseas demand for our trash.

But not all ports saw empties grow faster or nearly as fast as loaded containers.

At Vancouver, British Columbia, overall container traffic increased by 28.5% (+412,904 TEUs) from 2010 to last year. But loaded and empty containers grew at pretty much the same pace, with loaded boxes up by 27.5% (+343,224 TEUs) and empties by 24.2% (+69,680 TEUs).

At the Port of Oakland, total container traffic edged up by only 3.9% (+90,380 TEUs) from 2010 to 2017. Remarkably, the number of empties that passed over the San Francisco Bay port last year, was actually 0.3% lower (-1,733 TEUs) than the port had seen in 2010, while loaded containers had edged ahead by 5.2% (+92,223 TEUs).

Between 2010 and 2017, Savannah saw loaded containers grow by 47.6% (+1,047,811 TEUs), while empties were up 27.7% (+173,222 TEUs). At Houston, traffic in empty containers actually shrank by 10.0% (-46,487 TEUs), while the number of loaded containers leapt by 51.4% (+646,739 TEUs).

For most ports, the vast majority of empty containers moved on the outbound trades. At the Port of New York/New Jersey, 57.0% of all outbound TEUs last year were devoid of contents. That’s nearly the same as across the country at the Port of Los Angeles, where 57.7% of all outbound TEUs were empty last year. (The Port of Long Beach does not break down its outbound trade, but it is generally assumed that its experience with outbound empty TEUs parallels those of the port next door.)

Importantly, though, PNYNJ last year reported its most robust year ever for total outbound traffic (3,292,857 TEUs), a 20.3% increase over 2011. However, loaded outbound trade shrank by 16.4% from 2011 (-205,942 TEUs). By contrast, empty outbound traffic jumped by 69.2% (+170,729 TEUs).

At the Port of Baltimore, a 56.3% (+174,121 TEUs) increase in overall outbound trade between 2010 and 2017 was propelled largely by a 122.3% leap in empty TEUs. The empty container share of the port’s total outbound trade grew from 35.4% in 2010 to 50.2% last year.

So, what’s to become of all those boxes that are unable to find backhaul cargo? Transporting empty metal crates is an expensive proposition. A recent Boston Consulting Group study found that repositioning represented 5% to 8% of total operating costs for carriers. With more than 38 million containers in use around the world today, the United Nations estimates that the transportation industry spends an estimated $30 billion a year on the storage, handling, and repositioning of empty containers.

Someday, the industry may come to embrace intermodal containers that fold into themselves to facilitate stacking, minimize repositioning costs, and reduce toxic emissions associated with goods movement. There is some encouraging news on this front. Companies in Europe and Australia have been developing designs for containers that can be folded to one-fourth of their serviceable dimensions. Collapsible TEUs would enable more efficient use of port terminals by reducing the storage space needed for empties. Toxic vehicle emissions could also be sharply reduced if trucks could dray four folded containers instead of doing so one-at-a-time.

Until the costs of collapsible containers come down and their reliability is proved, empty metal boxes will doubtless continue to swell the TEU counts at our seaports. Still, while there is ample cause for despair, there is also room for hope. Within a few blocks of my home, entrepreneurs have built no fewer than three pubs out of decommissioned shipping containers.

I don’t know about you, but I find it downright heartwarming that something so vital to modern international trade is now also repurposed to provide snug shelter for the drinking class.

The commentary, views, and opinions expressed by Jock O’Connell are his own and do not reflect the views or positions of the Pacific Merchant Shipping Association. PMSA does not endorse, support, or make any representations regarding the content provided by any third party commentator.