Chasing the Chimera of Market Share
By Jock O’Connell
“There’s been a loss of market share for a generation on the West Coast. Seventeen years ago, 80 percent of the cargo within the trans-Pacific theater moved over the West Coast. Today, it’s about 60 percent.” This is what Gene Seroka, Executive Director of the Port of Los Angeles, stated at the Port Performance North America Conference in Newark, New Jersey, in early December.
The decline appears to be more than just a passing trend. As if to underscore the gravity of the situation, one might imagine Hector Berlioz’s dramatic “The March to the Scaffold” as the soundtrack for a modern documentary on the struggles of U.S. West Coast ports.
Recent statistics paint a sobering picture. In 2019, container traffic at the Port of Los Angeles dropped by 1.3% compared to 2018, marking a decline from previous years as well. The Port of Long Beach experienced a 5.7% decrease in container volume from 2018. Collectively, the two ports—major gateways for U.S. container trade—suffered a 3.3% year-over-year decline, amounting to a loss of 580,108 TEUs. What’s more concerning is that these ports saw only a marginal 0.5% increase in container traffic compared to 2017.
The figures show that import loads at Los Angeles were at their lowest since 2016, and export loads fell to their lowest since 2015. Although traffic in empty containers increased by 6.8%, Long Beach’s empty container numbers actually fell by 2.8%.
Elsewhere on the West Coast, the Port of Oakland saw a slight 1.8% decrease in total TEUs compared to 2018 but managed a 3.3% increase from 2017. The Ports of Seattle and Tacoma, operating as the Northwest Seaport Alliance, handled 0.6% fewer TEUs than in 2018 but saw a 2.0% rise from 2017.
In total, the five major U.S. West Coast container ports handled 23,245,402 TEUs in 2019, a decline of 649,346 TEUs from the previous year. Inbound loaded containers decreased by 5.0% and outbound loads fell by 3.9%.
In contrast, ports elsewhere showed impressive growth. The Port of Prince Rupert experienced a remarkable 16.9% increase in container volume. Vancouver posted a modest 0.1% gain. The Port of Houston saw a 10.6% rise, and the Port of New Orleans experienced a 9.7% increase. On the East Coast, the Port of Charleston grew by 5.2%, and the Port of Virginia by 2.9%. Even the Port of Boston saw a slight 0.8% increase in container volume.
Given the trading anomalies of 2018, when U.S. importers rushed goods through ports in anticipation of potential tariffs, lower numbers in 2019 were anticipated. The Journal of Commerce reported that East Coast ports experienced their slowest growth in three years, yet the continued erosion of West Coast market share remains relentless.
Some readers have suggested we stop regularly highlighting the disheartening TEU figures for West Coast ports, arguing that it might aid rival ports in justifying additional state and local funding. However, our role is to provide accurate data, countering overly optimistic portrayals that might mislead stakeholders and policymakers.
The reality is stark: significant macroeconomic, demographic, and political shifts are reshaping global supply chains. This raises a critical question: Is chasing market share the best measure of success in today’s evolving trade landscape? If not, are strategies focused on reclaiming lost market share merely attempts to revert to an outdated paradigm?
In future commentaries, I plan to delve deeper into these profound changes in global trade and the challenges facing U.S. West Coast ports.
Disclaimer: The views expressed in Jock’s commentaries are his own and may not reflect the positions of the Pacific Merchant Shipping Association.