FEDERAL MARITIME COMMISSION 

Office of Commissioner Richard A. Lidinsky, Jr. 

Statement of Commissioner Richard A. Lidinsky, Jr. 

FOURTH ANNUAL UPDATE:

U.S. Inland Containerized Cargo Moving Through Canadian and Mexican Seaports

2015: Diversion, Port Expansion, and Shifting Market Shares

Four years ago, the Federal Maritime Commission released the Study of U.S. Inland Containerized Cargo 

Moving through Canadian and Mexican Seaports (“2012 Study”) at the request of Congressional 

representatives for the Pacific Northwest. Consistent with our practice since the release of that study, this 

is the fourth update, which focuses on 2015. This year’s update also contains an annex of other current 

maritime issues that present serious challenges to U.S. ports.

2015 was a pivotal year for U.S. cargo diversion into Canada and Mexico. Initiation of new vessel alliances 

and reaction in terminals resulted in congestion at West Coast ports towards the end of 2014 and into the 

beginning of 2015 caused severe delays. In late 2014, the Federal Maritime Commission was actively 

monitoring this situation and on November 17, 2014 told carriers to stop attempting to impose proposed 

congestion surcharges. At one point in 2015, there were twenty ships anchored off the coast of the Ports 

of Los Angeles and Long Beach, fourteen ships waiting off the coast of the Port of Oakland, and seven 

ships off the coast of the Ports of Seattle and Tacoma. 2015 saw a dramatic increase in container volumes 

at the Port of Prince Rupert and Port Metro Vancouver on the West Coast of Canada, and Port Lázaro 

Cárdenas on the West Coast of Mexico. At the same time, 2015 saw a decrease in container volumes at 

the Ports of Los Angeles, Long Beach, and Oakland as cargo ships carrying goods bound for the U.S. were 

diverted to foreign ports. Overall, the United States lost market share in the North American container 

trade as both Mexico and Canada gained market share.

As identified in previous years’ reports, a leading cause for cargo diversions is port congestion, which is in 

turned caused by a combination of factors that lead to serious operational disruptions for a port. While 

severe congestion manifested in Los Angeles, Long Beach, and Oakland in 2014-2015, it is a condition that 

can develop at any port, in any place in the world and lead to domestic or foreign port cargo diversions. 

Cargo diversion is not a new phenomenon brought about by the congestion crisis. For years, foreign

shippers have been directing vessels into Canadian and Mexican ports because of the benefits they offer 

as another route into mainland United States. Over roughly the past ten years, as the Port of Prince 

Rupert’s container operations have come online, U.S. West Coast cargo volumes have decreased. For the 

Ports of the Northwest Seaport Alliance in particular, inbound rail cargo beyond their Port’s range has 

decreased from 60-70% of total imports to 50-55% of total imports.
All was not lost for West Coast ports last year. Once the congestion on the West Coast subsided and the 

vessels waiting outside port could make call, West Coast U.S. ports experienced growth for consecutive 

months to close out the year. This growth continued through the first quarter of 2016. West Coast ports 

and the U.S. government have vowed that port congestion on the scale experienced in 2015 will not 

happen again, with West Coast ports taking steps to insure against a repeat. For example, massive 

infrastructure improvement and expansion projects are underway to ensure ports can handle the increase 

in cargo volume due to mega ships, and Super-Post-Panamax cranes are being installed along the West 

Coast to move more TEUS than ever before. Further, evidence shows that shippers still prefer the 

efficiency and reliability that comes from using the United States as a gateway into North America.

In light of 2015 representing another year in which Canada and Mexico experienced growth in market 

share of North American cargo, it is clear that in order to stay competitive with neighboring foreign ports, 

U.S. ports must continue to expand and improve to handle rising container volumes of the coming years.

I would like to personally thank and give credit for their vital assistance in preparing the report to Colin D. 

Rowe, a rising 3rd year law student at Tulane University’s School of Law who served as the Commissioner’s 

summer intern, Michael Gordon, Senior Maritime Advisor in the FMC’s Bureau of Trade Analysis, and 

Jewel Jennings-Wright, who is Counsel to the Commissioner. To the extent that there are any errors or 

omissions, they are the responsibility of myself alone.

___________________

Richard A. Lidinsky, Jr. 

Commissioner

Chairman, 2009 – 2013 

Federal Maritime Commission

Washington, D.C.

June 30, 2016
1

2015 Update

2015 North American Container Trade

The North American container trade grew only 1.6% in 2015, with an increase from 39.9 million twentyfoot equivalent units (TEUS) both inbound & outbound in 2014 to 40.6 million total TEUS both inbound & 

outbound in 2015.1 This number represents a further decrease from the already minimal growth 

experienced in 2014 of 2.5% year-over-year compared to 2013.2 U.S. ports led all North American ports, 

handling 31.9 million TEUS in 2015 (representing 78.5% of the North American container trade), with 

Canadian ports handling about 4.9 million TEUS (12.0%), and Mexican ports handling almost 3.9 million 

TEUS (9.5%).3

Total North American Container Trade – 2014/20154

Country TEUS Handled 

(2014)

Percentage of 

Trade (2014)

TEUS Handled 

(2015)

Percentage of 

Trade (2015)

United Sates 31,628,147 79.1% 31,885,694 78.5%

Canada 4,676,509 11.7% 4,867,393 12.0%

Mexico 3,669,673 9.2% 3,855,988 9.5%

Total North America 39,974,329 100.0% 40,609,074 100.0%

Mexican ports experienced the highest year-over-year growth at 5.1% in 2015. Canadian Ports grew 4.1%, 

while U.S. ports grew only 0.8% in 2015.5 Growth experienced by Canadian and Mexican ports in 2015 

continued a similar trend from 2014, which saw Canadian Ports grow 1.4%, Mexican ports grow 3.5%, and 

U.S. ports grow only 2.6% year-over-year.6 This represents the second year in a row where ports outside 

the United States experienced a growth rate higher than their U.S. counterparts. Mexican seaports in 

particular experienced the highest growth for a second year in a row. 

Though U.S. container trade was down overall last year, West Coast U.S. ports in particular suffered in 

2015.7 The Ports of Los Angeles, Long Beach, and Oakland experienced a slide of -7.4%, -1.1%, and -5.5% 

 

1 Marsha Salisbury, LA Keeps Title as Top North America Port, Despite Traffic Dip, THE JOURNAL OF COMMERCE, May 

05, 2016, http://www.joc.com/special-topics/top-25-north-american-ports. 2 Federal Maritime Commission, Third Annual Update: Study of U.S. Inland Containerized Cargo Moving Through 

Canadian and Mexican Seaports 2014: Diversion, Expansion, and Congestion, Jun. 30, 2015, 1. 3 Salisbury, supra note 1. 4 Id. 5 Id. 6 Id. 7 See Bill Mongelluzzo, West Coast Container Traffic Slipped in 2015, THE JOURNAL OF COMMERCE, Feb. 1, 2016, 

http://www.joc.com/port-news/us-ports/west-coast-container-traffic-declines-3-percent-2015_20160201.html. 
2

year-over-year, respectively, in 2015.8 The Port of Seattle and the Port of Tacoma, together the Northwest 

Seaport Alliance, experienced growth of 1.3% year-over-year. East Coast U.S. ports were able to keep the 

overall U.S. container trade in positive figures, with ports in Georgia, South Carolina and Miami

experiencing larger than normal container volumes. In comparison, the Port of Prince Rupert in Canada

experienced an increase of 14.3% year-over-year; Halifax experienced growth of 4.6%; and Port Metro 

Vancouver experienced growth of 2.5%.9 In Mexico, the Port of Altamira, on the Gulf Coast grew 16.0 %;

Port Lázaro Cárdenas, on the Mexican West Coast experienced total container growth of 0.6% year-overyear; and the Port of Manzanillo, also on the Mexican West Coast, experienced an increase of 2.1%.10

Fastest Growing North American Ports (TEUS)11

2014 2015

Port Inbound Outbound Inbound Outbound 2014 Total 2015 Total Y-O-Y % Change

Altamira 176,559 271,014 232,392 286,619 447,573 519,011 16.0%

Prince Rupert 358,902 156,998 435,908 153,615 515,900 589,523 14.3%

Miami 344,439 335,577 408,219 363,235 680,017 771,455 13.4%

Georgia Ports 1,347,467 1,252,759 1,607,858 1,213,013 2,600,226 2,820,871 8.5%

Seattle-Tacoma12 1,240,528 876,594 1,303,009 841,797 2,117,122 2,144,806 1.3%

Long Beach 3,560,654 1,397,584 3,619,183 1,286,252 4,958,238 4,905,434 -1.1%

Oakland 827,427 784,688 813,924 707,928 1,612,115 1,521,852 -5.6%

Los Angeles 4,204,406 1,705,590 3,978,604 1,493,035 5,909,996 5,471,639 -7.4%

Inbound trade saw a repeat of 2014, with Mexican ports leading growth with a 9.9% year-over-year 

increase (compared to a 9.2% increase in 2014), followed by a 6.8% growth at Canadian ports (compared 

with a 7.0% increase in 2014), and 3.8% increase in U.S. ports (6.1% in 2014).13 Of the total inbound cargo 

handled at North American ports, U.S. ports saw around 19.9 million TEUS in 2015, Canadian ports saw 

2.8 million TEUS, and Mexican ports saw 2.3 million TEUS.

14

 

8 Salisbury, supra note 1. 9 Id. 10 Id. 11 Id. 12 Combined data from Port of Seattle and Port of Tacoma, members of the Northwest Seaport Alliance. 13 Salisbury, supra note 1. 14 Id.
3

Total North American Inbound Container Trade Growth15

Country 2014 2015 Y-O-Y % Change 2014 % of Total 2015 % of Total

United States 19,164,324 19,898,706 3.8% 79.9% 79.4%

Canada 2,639,571 2,803,953 6.2% 11.1% 11.2%

Mexico 2,132,930 2,343,625 9.9% 9.0% 9.4%

Total 23,936,825 25,046,284 4.6% 100.0% 100.0%

The dramatic decrease for U.S. inbound cargo of 0.5% (79.9% versus 79.4%) illustrates a continuation of 

the trend seen in 2014, where U.S. inbound cargo decreased 0.3%.16 The increase in both Mexican and 

Canadian bound cargo of 0.4% and 0.1%, respectively, represents a slight change from 2014, where 

Mexican inbound cargo increased by 0.3% while Canadian inbound cargo remained constant.17

Aftermath of West Coast Decline of 2015

Major U.S. port on the West Coast suffered in 2015 with major port congestion being the leading cause 

of the decrease in efficiency and reliability.18 Statistics released by the Journal of Commerce show West 

Coast ports in 2015 with a slight increase in imports of 2% year-over-year compared to 2014. However, 

exports from West Coast declined 9%, leading to an overall 3% decrease in total container volume. 19

West Coast ports can take comfort in the fact that 2015, was anything but normal. A month-by-month 

analysis of container volumes moving through U.S. West Coast ports bears little resemblance to normal 

traffic flows. Containerized imports in January 2015 dropped 29% year-over year, and February container 

volumes were down 21% year-over-year.20 The reason for this? 2015 started off with the ongoing contract 

negotiations between the International Longshore and Warehouse Union (“ILWU”) and the Pacific 

Maritime Association (“PMA”),21 eventually leading to the PMA discontinuing all vessel work during night 

shifts at all West Coast ports in January 2015.22 Congestion was such an issue that night shifts had to be 

focused on clearing out the container yard in order to accept new containers when work resumed the 

 

15 Id. 16 Marsha Salisbury, Ports of Prince Rupert, Manzanillo Lead Growth, THE JOURNAL OF COMMERCE, May 12, 2015, 

http://www.joc.com/port-news/ports-prince-rupert-manzanillo-lead-growth_20150512.html. 17 Id. 18 See Bill Mongelluzzo, Vessels Backing Up at an Alarming Rate on West Coast, THE JOURNAL OF COMMERCE, Jan. 28, 

2015, http://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouseunion/vessels-backing-alarming-rate-west-coast_20150128.html. 19 Mongelluzzo, supra note 7. 20 Id. 21 See Bill Mongelluzzo, LA-Long Beach, Oakland, PNW Congestion Reaches Critical Stage, THE JOURNAL OF

COMMERCE, Feb 3, 2015, http://www.joc.com/port-news/us-ports/port-los-angeles/la-long-beach-oakland-pnwcongestion-reaches-critical-stage_20150203.html. 22 Id.
4

next morning.23 By February, at least twenty ships were anchored off Los Angeles-Long Beach awaiting 

their berths, at least fourteen vessels waited outside the Golden Gate Bridge for the Port of Oakland to 

clear, and at least seven cargo-laden vessels waited outside Seattle-Tacoma.24 In March, a month that is 

normally calm after the busy Jan-Feb period, U.S. West Coast Ports experienced massive growth yearover-year compared to 2014 as vessels that had been waiting outside were finally able to call. West Coast 

March imports grew 51% from March 2014.25

These factors led directly to cargo diversionsto Canadian Ports. Port Metro Vancouver, which was coming 

off a record-breaking 2014, had a dramatic increase of 1.5 million TEUS in the first half of 2015.26 Similarly, 

the Port of Prince Rupert’s market share grew from 9% to 12% during this stretch.

27

East Coast and Gulf Coast Ports thrived during 2015, some experiencing record years.

28 On the East Coast,

container volume increased as a result of shipper and BCO willingness to divert cargo away from West 

Coast ports to avoid port congestion. According to a report by American Shipper in March 2015, more

than 40% of retailers and manufacturers were planning to shift volume from West Coast ports to East 

Coast Ports on a long-term basis as a result of chronic congestion.29 On the Gulf Coast, inbound container 

volume exceeded that of the overall United States.

30 In 2015, 1.2 million TEUS of inbound container cargo 

were delivered to the U.S. Gulf Coast, representing 6.1% of the overall 19.9 million laden TEUS inbound 

to the U.S.31 Inbound TEU volume increased 9.9% year-over-year over 2014.32 The chart below reveals a 

comparison of the top West Coast, East Coast, and Gulf Coast ports in 2015.

 

23 Id. 24 Id. 25 Mongelluzzo, supra note 7. 26 Dustin Braden, U.S. Port Diversions Fuel High Single-Digit Growth at Vancouver, THE JOURNAL OF COMMERCE, Aug. 

18, 2015, http://www.joc.com/port-news/international-ports/port-metro-vancouver/us-port-diversions-fuel-highsingle-digit-growth-vancouver_20150818.html. 27 Id. 28 Bill Mongelluzzo, U.S. West Coast Port Container Volume Rises, THE JOURNAL OF COMMERCE, May 6, 2016, 

http://www.joc.com/port-news/us-ports/us-west-coast-volume-rises_20160506.html. 29 Ben Meyer, Shipper and BCOs Divert Cargo to Avoid West Coast Port Congestion, AMERICAN SHIPPER, Mar. 18, 

2015, 

http://www.americanshipper.com/Main/News/Shippers_and_BCOs_divert_cargo_to_avoid_West_Coast_59736.a

spx?source=MostPopular. 30 Marsha Salisbury, TEU Growth of U.S. Gulf Coast Ports Exceed That of Overall U.S., THE JOURNAL OF COMMERCE, 

Jun. 13, 2016, http://www.joc.com/port-news/us-ports/port-houston/teu-growth-us-gulf-coast-ports-exceedsoverallus_20160613.html?utm_source=email&utm_medium=newsletter&utm_campaign=daily%25newswire&mgs1=f76a

nd419c. 31 Id. 32 Id.
5

2015 West/East/Gulf Coast Port Inbound Comparison (TEUS)33

Port 2014 Inbound 2015 Inbound Y-O-Y % Change % North American 

Market Share

New Orleans 92,902 113,852 22.6% 0.5%

Georgia Ports 1,347,467 1,607,858 19.3% 6.4%

Miami 334,439 408,219 18.5% 1.6%

Houston 753,660 842,381 11.8% 3.4%

Seattle-Tacoma34 1,240,528 1,303,009 5.0% 5.2%

Long Beach 3,560,654 3,619,183 1.6% 14.4%

Oakland 827,427 813,924 -1.6% 3.2%

Los Angeles 4,204,406 3,978,604 -5.4% 15.9%

Despite the decline in inbound container cargo, West Coast Ports continue to possess the largest 

percentage of market share. The Ports of Los Angeles, Long Beach, Oakland, and Seattle-Tacoma 

collectively make up 38.7% of the North American inbound container market.35 The Gulf Coast as a whole 

represents only 4.8% of the total North American inbound container market. 36

West Coast diversion has stabilized since the early months of 2015. The ILWU and PMA reached a tentative 

contract agreement in February of 2015. By August 2015, container traffic on the U.S. West Coast began 

reverting back to previous levels.

37 By December 2015, the Port of Long Beach had seen five straight 

months of cargo increase.

38 Year-to-date, West Coast ports have seen an increase in container volumes 

compared with 2015.39 (It should be noted, however, that the 3,389,035 TEUS handled by the West Coast 

ports through the first quarter of 2015 were the lowest since the global recession of 2009.40) East Coast 

ports have seen a drop in inbound container traffic compared with last year, while West Coast ports have 

seen an increase in container traffic.41

The annual increase in congestion rates combined with the labor disputes of late 2014 and early 2015 and 

the growing attraction of foreign ports as a means of getting cargo into the United States all led to the 

continued growth of cargo diversions in 2015. West Coast slowdowns had a significant impact on state 

 

33 Salisbury, supra note 1. 34 Combined data from Port of Seattle and Port of Tacoma, members of the Northwest Seaport Alliance. 35 Salisbury, supra note 1. 36 Salisbury, supra note 30. 37 Mongelluzzo, supra note 7. 38 The Port of Long Beach, Port Sees Fifth Straight Month of Cargo Gains, Dec. 10, 2015, 

http://www.polb.com/news/displaynews.asp?NewsID=1510&TargetID=1. 39 See Bill Mongelluzzo, West Coast Ports Back on Track for Growth, THE JOURNAL OF COMMERCE, Mar. 27, 2016, 

http://www.joc.com/port-news/us-ports/west-coast-ports-back-track-growth_20160327.html. 40 Bill Mongelluzzo, U.S. West Coast Port Container Volume Rises, THE JOURNAL OF COMMERCE, May 6, 2015, 

http://www.joc.com/port-news/us-ports/us-west-coast-volume-rises_20160506.html. 41 Id.
6

and national economies. Washington State, for example, lost $769.5 million in economic activity due to 

the 2014-2015 port management-labor contract dispute.42 On the national level, port congestion led to a 

drop in 0.2% in the national GDP through the first quarter of 2015.43

Canadian and Mexican Diversion from U.S. West Coast Seaports

As previously stated, 2015 saw yet another year in which Canada and Mexico experienced growth in 

market share in North America as the United States’ market share slipped. In order to stay competitive 

with neighboring foreign ports, U.S. ports must continue to expand and improve to handle the rising 

container volumes of the coming years. 

Canadian Port Expansion

Port of Prince Rupert

As identified in the original Study of U.S. Inland Containerized Cargo Moving through Canadian and 

Mexican Seaport, and repeatedly in annual reports, the Port of Prince Rupert (Prince Rupert) poses as an 

attractive alternative for U.S. West Coast ports for U.S. inbound container traffic. In the years since Prince 

Rupert opened, the number of container lines offering services has increased from one to ten.44 The port 

currently receives four direct calls per week, including two by COSCO, one by Hanjin Shipping, and one by 

the 2M Alliance of Maersk Line and Mediterranean Shipping Co.45 Carriers with slot access include CMA 

CGM, “K” Line, Yang Ming, and Evergreen Line. Wan Hai Lines is set to start taking slots this summer.46

Prince Rupert continues to advertise itself as having “significant competitiveness advantages over other 

West Coast North American Ports.”47 Such advantages include the shortest trade route between North 

America and Asia (68 hours), natural channel depth (channel depths of 35m./114ft. and terminal berths 

of 17m./55ft.), “modern, state-of-the-art facilities,” and access to “fast, efficient, and uncongested rail.”48

Prince Rupert has continued to grow since the original study and continues to take market share away 

from U.S. West Coast ports. Canada’s third largest port, Prince Rupert, located in British Columbia, was 

the second fastest growing port in 2015 in North America continuing a trend from 2014. Prince Rupert 

experienced a 21.5% increase in inbound traffic year-over-year compared to 2014 (18.9% increase of from 

 

42 Bill Mongelluzzo, U.S. West Coast Congestion Cost Washington $770 million, Study Says, THE JOURNAL OF

COMMERCE, Feb. 22, 2016, http://www.joc.com/port-news/longshoreman-labor/international-longshore-andwarehouse-union/us-west-coast-congestion-cost-washington-770-million-study-says_20160222.html. 43 Reynolds Hutchinson, Uncle Sam Seeks Shipper Input on How to Fight Port Congestion, THE JOURNAL OF

COMMERCE, May 31, 1990, http://www.joc.com/regulation-policy/transportation-policy/us-transportationpolicy/uncle-sam-seeks-help-shippers-fighting-port-congestion_20160531.html. 44 Prince Rupert: Evolution from Remote Fishing Port Into Critical Container Shipping Link, May 4, 2016, 4. 45 Id. 46 Id. 47 Port of Prince Rupert Port Authority, Competitive Advantages, http://legacy.rupertport.com/trade/advantages

(last visited Jun. 15, 2016). 

48 Id.
7

2013 to 2014).49 In order to keep up this growth, Prince Rupert has invested in a multi-phase expansion 

of its Fairview Container Terminal.50 Phase I of expansion will increase the total capacity of Prince Rupert 

to 850,000 TEUS.

51 Each of the four cranes at Fairview Terminal are super-post panamax capable.52 Phase 

II, scheduled for completion in 2017, aims to increase annual capacity by an additional 500,000 TEUS, 

bringing the total capacity of Fairview Terminal to around 1.35 million TEUS.

53 DP World has since 

purchased Fairview Terminal and is considering further expansion. Dubbed “Phase II South,” the DP World 

expansion “could potentially be delivered within the next three to five years depending on demand,” and 

has the potential to raise total capacity of Fairview terminal beyond 2 million TEUS. Prince Rupert has 

been approved for an environmental feasibility assessment in accordance with the Canadian 

Environmental Assessment Agency.54

A white paper released by Prince Rupert earlier this year identifies U.S. West Coast port congestion as a 

cause for the Terminal’s increased volumes earlier this year. The numbers support this claim. Through the 

first half of 2015, Prince Rupert’s market share for North American container traffic jumped from 9% to 

12%.55 Due to Prince Rupert’srapid growth, the port is nearing capacity, and as a result, container volumes 

appear to be flattening out. However, flat volumes at Prince Rupert does not diminish its threat to U.S. 

cargo diversions. The major concern of Staff members at the Northwest Seaport Alliance is “is what 

happens when Prince Rupert completes development of additional berths and terminals,” identifying that, 

“this new capacity will allow continued erosion of US market share.”56

Prince Rupert attributes much of its growth to its relationship with the Canadian National Railway Co. 

(“CN”).

57 CN schedules two intermodal train arrivals and two intermodal train departures per day to and 

from Fairview Terminal, with an average of fourteen train arrivals and fourteen train departures per week. 

Prince Rupert has 12,000 feet of on-dock rail and twenty-one reach stackers helping to minimize the time 

between unloading and loading containers from ship to railcar.58 The FMC has found that Prince Rupert 

holds a cost advantage over West Coast ports which could be in the range of $250 to $400 per FEU to 

Chicago via rail.

59

 

49 Salisbury, supra note 1. 50 Prince Rupert Port Authority, Container Terminal Will Increase Port’s Capacity and Economic Impact, Mar. 10, 

2015, http://www.rupertport.com/news/releases/fairview-terminal-expansion. 51 Prince Rupert, supra note 44, at 2. 52 Id. 53 Prince Rupert Port Authority, Cargo Performance Proves Port’s Resilience in Shifting Economic Conditions, Jan. 

22, 2016, http://www.rupertport.com/news/releases/2015-performance-volumes. 54 DP World Eyes Prince Rupert Expansion, Dec. 15, 2015, 

https://www.porttechnology.org/news/dp_world_eyes_prince_rupert_expansion (last visited Jun. 15, 2016). 55 Braden, supra note 26. 56 E-mail from Staff Members at the Northwest Seaport Alliance (Jun. 23, 2016, 12:16 EST). 57 Prince Rupert, supra note 44, at 5. 58 Id. at 5-6. 59 E-mail from Staff Members at the Northwest Seaport Alliance (Jun. 23, 2016, 12:16 EST).
8

Port of Prince Rupert – Inbound TEUS Handled (By Destination)

Country of Destination 2014 % 2015 % % Change Y-O-Y

United States 222,455 61.8% 295,990 67.3% 33.1%

Canada 137,505 38.2% 140,218 32.7% 2.0%

Total 361,974 100.0% 438,223 100.00% 21.1%

The Port of Prince Rupert handled 19.6 metric tons of cargo in 2015, a 4.8 decline from 2014.60 Private 

sources state that as much as 67.3% of cargo imported into Prince Rupert in 2015 had a final destination 

somewhere in the United States, compared to 61.8% in 2014. As a result, of the 438,223 TEUS inbound to 

the Port of Prince Rupert, nearly 295,990 TEUS were transshipped to a destination in the United States. 

In 2014, that number was approximately 222,455. As Prince Rupert nears capacity, it remains to be seen 

whether the expansion improvements continue the success of the terminal as U.S. West Coast ports gets 

back to normal productivity.

Port Metro Vancouver

Also situated in British Columbia on the west coast, Port Metro Vancouver is Canada’s largest port and 

the fifth largest port in North America. In 2015, Vancouver experienced an increase of inbound cargo of 

2.9% year-over-year compared with 2014 (5.7% increase from 2013 to 2014).61 The port handled 

1,542,388 inbound TEUS in 2015, making up 6.2% of the North American container market.62 It handled a 

total of 2,608,422 TEUS in 2015, a 2.5% year-over-year increase compared with 2,544,755 TEUS in 2014.63

Metro Vancouver also advertises itself as a more advantageous option than other ports. Vancouver offers 

twenty-eight major marine cargo terminals with three Class 1 railroads converging at the port. The 

terminals are Super-Post-Panamax capable, and have on-dock rail facilities.64 Of twenty-eight marine 

cargo terminals, Port Metro Vancouver has four common-user container terminals supported by fourteen 

transloading facilities and three container storage and maintenance facilities.65

However, the trade-enabling industrial land base in Metro Vancouver has been shrinking over the past 

thirty years. A study by Site Economics, Ltd., released at the end of 2015 identifiesthat there is only about 

1,000 acres of vacant trade-enabling industrial land available in the region suitable for logistics and goods

 

60 Id. 61 Salisbury, supra note 1. 62 Id. 63 Id. 64 Port Metro Vancouver, About Us, http://www.portvancouver.com/about-us/ (last visited Jun. 15, 2016). 65 Port Metro Vancouver, Container, http://www.portvancouver.com/cargo-terminals/container/ (last visited Jun. 

15, 2016).
9

movement required to support the growth of the port.66 According to the report, “... based on the average 

annual absorption rates and anticipated demand ...” the supply of industrial land in the region “could be 

depleted within a decade.”67 If the problem goes unaddressed, Port Metro Vancouver may be unable to 

remain competitive with other trade gateways.68 “This issue is critical to the future of the Canadian 

economy, considering nearly 20% of the value of all goods traded by Canada pass through the port here 

in Vancouver,” stated Robin Silverston, President and CEO of Port Metro Vancouver.69 The report also 

revealed that “roughly 1,500 to 3,000 more acres of trade-enabling industrial lands are required in the 

next five to ten years to meet the demands of a growing Canadian economy.”70

It remains to be seen how the reduction in trade-enabling industrial land will effect expansion plans to 

GCT’s Deltaport Terminal revealed several months before the Site Economics report was released.71 The 

C$200 million project is intended to expand on-dock rail capacity at the terminal in order to improve the 

port’s ability to handle the increase of U.S.-bound cargo and Canadian volume.72 The terminal has also 

purchased two new 23 TEU+ wide cranes which will be operational in early 2017. These two cranes will 

complement the current ten cranes at the facility. Metro Vancouver has also ordered eight electric, widespan cranes capable of handling 650,000 TEUS of new rail business, which will be ready to go in July of 

2017.73

Port of Halifax

U.S. bound cargo coming through Canada is not restricted to the West Coast. The Port of Halifax, located 

on the East Coast of Nova Scotia, is Canada’s third largest port, and the twenty-third largest port in North 

America. In 2015, the port experience 4.0% increase of inbound cargo year-over-year compared with 2014 

(153,622 TEUS in 2014 to 159,786 TEUS in 2015).74 The Port of Halifax suffered a period of decline between 

2013 and2014, experiencing a drop in inbound cargo of -6.7%, but now appears to be back on track thanks 

 

66 Port of Vancouver, New Study Reveals Looming Shortage of Trade-Enabling Industrial Land in Lower Mainland, 

Dec. 3, 2015, http://www.portvancouver.com/news-and-media/news/new-study-reveals-looming-shortage-oftrade-enabling-industrial-land-in-lower-mainland/ (last visited Jun. 22, 2016). 67 Id. 68 See Bill Mongelluzzo, Trade-Enabling Land Shortage Threatens Port Metro Vancouver Growth, THE JOURNAL OF

COMMERCE, Dec. 6, 2015, http://www.joc.com/port-news/international-ports/shortage-trade-enabling-landthreatens-growth-port-metro-vancouver_20151206.html. 69 Port of Vancouver, supra note 66. 70 Id. 71 See Mark Szakonyi, Vancouver Terminal Operator Invests to Handle More U.S. Cargo, THE JOURNAL OF

COMMERCE, Jan. 30, 2015, http://www.joc.com/port-news/international-ports/port-metro-vancouver/vancouverterminal-operator-invests-handle-more-us-cargo_20150130.html. 72 Id. 73 E-mail from Staff Members at the Northwest Seaport Alliance (Jun. 23, 2016, 12:16 EST). 74 Salisbury, supra note 1.
10

to new investments and a series of new carrier services since last year.75“The goal is to continue the 

trend,” says Patrick Bohan, Director of Supply Chain Logistics. A key growth market for the Port of Halifax 

is the U.S. Midwest.76

Since 2004, the Port of Halifax and its stakeholders have invested over C$200 million in infrastructure, 

including the addition of several super-post-Panamax cranes and the deepening of both the Halterm and 

Ceres Container Terminals to 55 ft.77 The Port of Halifax advertises itself as having “the deepest berths on 

the East Coast of North America.”78Features of the port include on-deck, direct-to-rail discharge, a modern 

infrastructure using the latest technology, and world class security.79

The Halifax Port Authority administers two container terminals. The Fairview Cove Container Terminal, 

operated by NYK/CERES Corp Co., contains 70 Acres of land and 2,297 linear feet of dock.80 The terminal 

boasts 11,000 feet of on-dock, double stack rail. Water depth at the dock has recently been expanded to 

55 feet along the entire length of the berth.81 Fairview Cove Container Terminal possesses five gantry 

cranes, including three Super-Post-Panamax capable cranes. The terminal has a maximum throughput 

capacity of 780,000 TEUS.

82 South End Container Terminal, operated by Halterm Container Terminal, Ltd., 

is comprised of 74.5 acres of land and 8,000 feet of on-dock, double stack rail.83 The terminal possesses 

seven gantry cranes, including for Super-Post-Panamax capable cranes. The terminal has a maximum 

throughput of 750,000 TEUS.

84

The Port of Halifax remains a popular avenue for cargo and freight bound for the U.S. Midwest. In March 

2016, Atlantic Container Line (ACL) signed an agreement to keep using Fairview CERES Terminal for its 

new G4 roll-on/roll-off ships through 2022.85 The agreement will make Halifax ACL’s “largest port in North 

America and our [ACL] gateway for Canada and the U.S. Midwest,” stated ACL president and CEO, Andrew 

Abbot.86 According to Abbot, quality improvements to the Canadian National rail service and consistent 

 

75 Leo Ryan, Halifax Container Volume Boosted by New Investments and Services, AMERICAN JOURNAL OF

TRANSPORTATION, Apr. 4, 2016, https://www.ajot.com/premium/ajot-halifax-container-volume-boosted-by-newinvestments-and-services. 76 Id. 77 Id. 78 Port of Halifax, About Us, http://portofhalifax.ca/about-us/ (last visited Jun. 16, 2016). 79 Id. 80 Port of Halifax, Fairview Cove Container Terminal, http://portofhalifax.ca/infrastructure-leasing/hpa-facilitiescargo/fairview-cove-container-terminal/ (last visited Jun. 16, 2016). 81 Id. 82 Id. 83 Port of Halifax, South End Container Terminal, http://portofhalifax.ca/infrastructure-leasing/hpa-facilitiescargo/south-end-container-terminal/ (last visited Jun. 16, 2016). 84 Id. 85 Chris Dupin, ACL Signs Agreement with Ceres Halifax Terminal, AMERICAN SHIPPER, Mar. 11, 2016, 

http://www.americanshipper.com/Main/ASD/ACL_signs_agreement_with_Ceres_Halifax_Terminal_63308.aspx. 86 Id.
11

cooperation from the International Longshoreman Association who work the terminal were “influential 

factors” in the decision to remain at CERES Halifax Terminal.87

State of Canadian Rail

In last year’s report, we identified Canada’s railway system as being the backbone of the Canadian ports’ 

ability to divert cargo away from the U.S. West Coast.88 That statement is still accurate. All three major 

Canadian ports, Halifax, Prince Rupert, and Vancouver have extensive on-dock rail for simple and seamless 

transfer of cargo. The CN’s ongoing US$210 million container terminal outside Toronto will effective 

increase the railroad’s capacity by around 350,000 containers.

89 The new hub will connect incoming cargo 

from both Canadian West and East coasts and provide CN customers access “to the key transboarder 

market as well as the Pacific and Atlantic Coast trade gateways [CN serves] ...”90

CN is extending its reach further south into the U.S. The CN has teamed with the Port of Mobile, Alabama

in an attempt to establish a “third coast” gateway under the assumption that shippers burned during the 

congestion slowdown 2015 will use Mobile to move imports into the U.S. Midwest.91 CN rail will be able 

to get to and from the Gulf Coast port in a period of 2 to 3 days. CN’s rail network cuts from busy Canadian 

ports on the west and east coast into Toronto, then into the U.S. via Chicago and Detroit, and on to 

Memphis, and then down to the Gulf of Mexico to Mobile.92 The allure of Mobile is the port’s ability to 

handle the larger vessels that will be able to move through the renovated Panama Canal. The ports 

possesses water depths of 45 feet, plus an extra two feet of water at high tide, and is capable of handling 

350,000 TEUS annually. The Port of Mobile is currently in the middle of an expansion that will increase its 

annual TEU capacity to 500,000 by the end of this year, with plans to deploy Super-Post-Panamax cranes 

by the second half of 2017.93 With the possibility of Mobile taking away vessels from U.S. West Coast ports 

and its connection to intermodal hubs in Chicago and further into Canada, it is clear why CN aims to 

establish itself on the U.S. Gulf Coast.

Mexican Port Expansion

2015 held mixed results for Mexican seaports. Labor disputes and congestion at U.S. West Coast ports 

allowed Mexican West Coast ports to experience an uptick in container volumes, and proved that Mexican 

 

87 Id. 88 Federal Maritime Commission, Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican 

Seaports, Third Annual Update, Jun. 30, 2015, 6. 89 Id. 90 CN to Build New C$250-Million Intermodal and Logistics Hub in Milton, Ont., West of Toronto, Canadian National 

Railway Co., Mar. 17, 2015, http://www.cn.ca/en/news/2015/03/pressrelease_20150317011634_2091 (last visited 

Jun. 22, 2016).

91 Mark Szakonyi, CN Teams with Mobile, APMT for ‘Third-Coast’ Gateway, THE JOURNAL OF COMMERCE, Nov. 19, 

2015, http://www.joc.com/port-news/us-ports/port-mobile/cn-teams-mobile-apmt-%E2%80%98thirdcoast%E2%80%99-gateway_20151119.html. 92 Id. 93 Id. 
12

West Coast ports were more than up to the challenge in their ability to handle additional cargo when their 

U.S. West Coast counterparts experienced congestion.

Mexico’s ability to handle cargo from congested U.S. west coast will be further upgraded when APM’s 

fully automated Terminal in Lázaro Cárdenas opens in mid-2016, with an annual throughput capacity of 

1.2 million TEUS. This combined with the ports current annual capacity will bring the ports annual TEU 

capacity to 3.2 million in 2016.94

Although the future for Mexican seaports looks bright, there are troubling short term signs for cargo 

transiting to the U.S. destinations. Kansas City Southern rail operations from Lázaro Cárdenas to points in 

the U.S. continues to experience growing pains and service reliability.

95 Competition from the Panama 

Canal’s expanded locks will prove challenging by allowing carriers to offer all-water routes from Asia to 

U.S. Gulf Coast Ports at rates which are competitive with rates on cargo moving through west coast ports 

to points in the U.S. Gulf. In confirming the latter, Maersk recently announced it was replacing its Mexican 

intermodal route to Houston with an all-water service using 4,200 TEU ships. 96

Maersk Line’s new all-water service to the U.S. Gulf Coast from Asia is a direct result of the 2014 and 2015 

West Coast port delays. “It’s a faster product, a more reliable product, and we have shifted away from 

Lázaro Cárdenas” Soren Eghom, Maersk’s vice president, trade and marketing, for North America, said at 

JOC’s Gulf Shipping Conference in Houston (6/13/2016).

97 Maersk had been moving 200 – 250 forty foot 

equivalents per week via Lázaro Cárdenas, but expects to move 1,000 boxes per week on the new 

service.98

Port of Lázaro Cárdenas – Inbound TEUS Handled in 2015 (by Destination)

Country of Destination Inbound TEUS %

United States 17,284 3.8%

Mexico 229,211 50.0%

Other 211,418 46.2%

Total 457,913 100.0%

 

94 APM Terminals, Press Release, APM Terminals Readies Lázaro Cárdenas TEC2, Mar. 18, 2016, 

http://www.apmterminals.com/en/news/press-releases/2014/12/apm-terminals-readies-lazaro-cardenas-tec2. 95 Reynolds Hutchinson, KCS Pulls Back Expectation of Lázaro Cárdenas-Fueled Intermodal Surge, THE JOURNAL OF

COMMERCE, Jan. 22, 2016, http://www.joc.com/rail-intermodal/class-i-railroads/kansas-city-southernindustries/kcs-pulls-back-expectation-lazaro-cardenas-fueled-intermodal-surge_20160122.html. 96 Joseph Bonney, All-Water Service Replaces Mexican Intermodal Route to Houston, THE JOURNAL OF COMMERCE, 

Jun. 14, 2016, http://www.joc.com/port-news/us-ports/port-houston/all-water-service-replaces-mexicanintermodal-route-houston_20160614.html. 97 Id. 98 Id.
13

According to numbers provided by the Port of Lázaro Cárdenas, only 3.8% of the cargo imported into 

Lázaro Cárdenas had a final destination somewhere in the United States. As a result, of the 457,913 loaded 

TEUS shipped into the Port of Lázaro Cárdenas, approximately 17,284 TEUS were transshipped to a 

destination in the United States,99 while 211,418 (46.2%) TEUS were transshipped to destinations other 

than the United States, and 229,211 (50%) of inbound TEUS remained in Mexico.100

West Coast Rebound

As congestion eased on the West Coast, the loss of container cargo volume at those ports was stemmed. 

By the end of 2015, West Coast volume began to increase.

In the Pacific Northwest, container imports at the Northwest Seaport Alliance (comprised of the Ports of 

Seattle and Tacoma) increased 23.1% year-over-year for the month of November compared to a bleak 

2014,beginning a slow progression to retake lost market share due to the slowdown.101 The Northwest 

Seaport Alliance was the only U.S. West Coast gateway to experience a year-over-year growth in 2015. 

Total container volume increased 3.7% year-over-year and inbound container traffic increased 5.0% for 

the entire year compared to 2014.102

Further down the coast, the Ports of Los Angeles and Long Beach see 2016 as a year in which they will 

return to normal container growth and regain market share. Through the first five months of 2016, West 

Coast ports have experienced back and forth trade volumes. In March, the West Coast was behind the 

East Coast in both import market share (45% West Coast compared to 47.8% East Coast), and 

containerized imports by volume.103 However, the West Coast, led by strong inbound container growth 

by the Port of Los Angeles, experienced impressive growth in May to get back to normal.104 The Port of 

Los Angeles experienced a 15% year over year increase compared to May 2015 which was the “... busiest 

May in the Port’s 109-year history,” said the LA Port Authority.105 The Port of Long Beach’s first five month 

total volume was down 1.4% year-to-date compared with 2015. However, Oakland and Los Angeles total 

container volumes were up 8.4% and 8.7%, respectively over 2015. The Port of Oakland, where exports 

have always led over imports, had an increase of outbound cargo of 5.1% in May over May 2015.106

 

99 E-mail from Departamento de Atención a Clientes, Port of Lázaro Cárdenas (Jun. 10, 2016, 14:54 EST). 100 Port of Lázaro Cárdenas, Estadisticas, http://www.puertolazarocardenas.com.mx/plc25/estadisticas (last visited 

Jun. 23, 2016).

101 Bill Mongelluzzo, Northwest Ports Continue to Make Volume Gains, THE JOURNAL OF COMMERCE, Dec. 28, 2016, 

http://www.joc.com/port-news/us-ports/port-tacoma/northwest-us-ports-continue-make-gains_20151228.html. 102 Bill Mongelluzzo, supra note 42. 103 Hugh Morley, Record Los Angeles Imports Fuel West Coast Rebound, THE JOURNAL OF COMMERCE, Jun. 15, 2016, 

http://www.joc.com/port-news/us-ports/port-los-angeles/record-los-angeles-imports-fuel-west-coastrebound_20160615.html. 104 Id. 105 Id. 106 Id.
14

United States – Prince Rupert, YTD Inbound TEU Comparison, 2016107,108

Through May 2016, West Coast ports continue to take back market share lost to East Coast and Gulf Coast 

ports during 2015. West Coast inbound cargo increased 2% year-over-year in May 2016, while East Coast 

imports dropped 20% year-over-year, and Gulf Coast imports dropped 13% year-over-year in May 2016.109

The West Coast rebound is being led by the Port of Los Angeles. With a new fully-automated container 

terminal at the Port of Long Beach capable of handling Super-Post-Panamax vessels, and the benefits of 

the Northwest Seaport Alliance beginning to show, ports up and down the West Coast of the United States 

are looking to make cargo gains in 2016. However, it remains to be seen how the new Panama Canal locks 

will affect the U.S. West Coast Ports. It will take a few months after the locks open this July to see its true 

impact on the U.S. West Coast.

Congressional

New Appropriations for Harbor Maintenance Act

The Water Resources Reform and Development Act of 2014 (WRRDA)110 was designed to address the use 

of monies collected by the Harbor Maintenance Trust Fund (HMTF) through the Harbor Maintenance Tax 

(HMT), and reaffirm the HMFT’s original purpose of providing funding for the maintenance and dredging 

 

107 Port of Los Angeles, TEU Statistics, https://www.portoflosangeles.org/maritime/stats.asp (last visited Jun. 21, 

2016); Port of Long Beach, TEUs Archive Since 1995, http://www.polb.com/economics/stats/teus_archive.asp (last 

visited Jun. 21, 2016); The Northwest Seaport Alliance, Cargo Stats, https://www.nwseaportalliance.com/statsstories/cargo-stats (last visited Jun. 21, 2016); Port of Prince Rupert, Performance Reports, 

http://www.rupertport.com/shipping/performance?year=2016&month=5 (last visited Jun. 21, 2016). 108 Northwest Seaport Alliance had not released cargo statistics for the month of May at the time of this report. 109 Hugh Morley, Fall of NY-NJ Imports Parallels Broader Coastal Traffic Decline, THE JOURNAL OF COMMERCE, Jun. 

27, 2016, http://www.joc.com/port-news/us-ports/port-new-york-and-new-jersey/fall-ny-nj-imports-parallelsbroader-coastal-traffic-decline_20160627.html. 110 Water Resources Reform and Development Act of 2014, Pub. L. No. 113-121.
15

of U.S. ports and harbors.111 The law sets the annual HMTF target percentage expenditures, increasing 

each year until FY2025 when 100% of the collected funds will be put back into the ports for operation and 

maintenance (O&M) improvements.112 Additionally, the law allocated 10% of HMTF expenditures for 

emerging harbors, as well as authorizes donor ports to use the HMT for expanded uses including berths 

and the dredging of contaminated sediments, environmental remediation, and payments to importers, 

exporters, and shippers transporting cargo through that port.113

After criticism of the Act’s failure to fulfill its promise, Congress is taking measures to send significant 

funding to the U.S. ports. In April of this year, the U.S. Senate Environment and Public Works Committee 

approved a Water Resources Development Act (WRDA) reauthorization bill, which aims to improve port 

and inland waterways infrastructure used by commercial vessels.114 The bill includes modifications to the 

cost-share formula used for improvement projects, extension of funding authorization for donor and 

energy-transfer ports, as well as new language to ensure funds appropriated from the HMT are used as 

intended until they are distributed in 2025.115 The House of Representatives also passed a WRDA bill 

allocating $2.7 billion specifically for navigation projects and studies, including $1.26 billion in funding 

from the HMTF and full use of estimated revenues from the Inland Waterways Trust Fund.116 Both bills 

are widely lauded by the maritime industry and port proponents. 

The Northwest Seaport Alliance believes that the HMT Reform bills “attempt to provide a comprehensive 

solution to HMT reform to address all ports’ priorities with regard to the HMT...” and will “substantially 

address” concerns about the HMT.”117

“This funding will go towards important dredging and maintenance projects and will be critical in ensuring 

our ports are prepared to handle the megaships of the future,” says Representative Janice Hahn (D-CA), a 

strong advocate of port funding who spearheaded the bill last year.118 Dredging and maintenance will 

significantly improve U.S. ports ability to handle larger inbound TEU loads that come with the mega ships, 

thus reducing port congestion and diminishing cargo diversion to Canadian and Mexican Ports.

FAST Act

 

111 Federal Maritime Commission, supra note 88, at 8 (In the original 2012 Study, the FMC determined the average 

TEU HMT cost to be $109).

112 Water Resources Reform and Development Act, supra note 110. 113 Id. at §2106. 114 Eric Kulisch, Senate Committee Passes Pro-Port WRDA Bill, AMERICAN SHIPPER, Apr. 29, 2016, 

http://www.americanshipper.com/Main/News/Senate_committee_passes_proport_WRDA_bill_63833.aspx. 115 Id. 116 Reynolds Hutchinson, U.S. Congress Set To Send More Money to Ports, THE JOURNAL OF COMMERCE, Apr. 15, 

2016, http://www.joc.com/regulation-policy/transportation-policy/us-transportation-policy/us-congress-set-sendmore-money-ports_20160415.html. 117 E-mail from Staff Members at the Northwest Seaport Alliance (Jun. 23, 2016, 12:16 EST). 118 Id.
16

The Fixing America’s Surface Transportation, or FAST, Act will allow the Department of Transportation to

monitor port efficiency through data-collecting and input from the industry.119 The FAST Act requires the 

Bureau of Transportation to collect and annually report performance measures for the nation’s top 25 

ports, as measured by total tonnage, containers (TEUS), and dry bulk tonnage.

120 A working group, made 

up of members including the Federal Maritime Commission, Army Corps of Engineers, Customs and 

Border Protection, the Coast Guard, and members of the maritime shipping industry, port authority 

community, and Labor representatives, among other federal agencies, will report to Congress with 

recommendations as to how the Department of Transportation can best calculate and provide 

information on port congestion.121

21st Century U.S. Port Competitiveness Initiative

The U.S. Department of Commerce is seeking public input to improve the efficiency and competitiveness 

of U.S. seaports.122 The initiative identifies Congressional intent to avoid a similar situation as the 2014-

2015 West Coast seaport slowdown. The agency identified that, “... the department’s goal is to ensure 

that U.S. seaports and their supply chain have the tools they need to strengthen U.S. port and supply chain 

competitiveness, facilitate international trade and catalyze local, regional, national economic growth and 

job creation.”123

The Department of Commerce has requested all interested parties provide input via internet or mail 

regarding several questions, including: what are the most important challenges and opportunities facing 

U.S. port-related operations and efficiency; what federal policies could be modernized to promote portrelated investment and performance; how the federal government can best collaborate with port 

stakeholders; what are the best practices for improving port-related operations; among others.124 So far, 

the department has held a series of regional meetings and roundtables with seaports, stakeholders, and 

port users, and asks input be provided by the cut-off date of July 11, 2016.125

Conclusion

As examined in great detail, several factors are contributing to continued use of neighboring foreign ports 

for U.S. inbound cargo: 3 major findings are port congestion, stale trade growth, and the ability of U.S. 

importers to determine cargo routing as part of their corporate import strategy. While there are positive

 

119 Fixing America’s Surface Transportation Act of 2015, Pub. L. No. 114-94. 120 U.S. Department of Transportation, The FAST Act: Freight Provisions, 

https://www.transportation.gov/fastact/freight-factsheet (last visited Jun. 16, 2016). 121 49 U.S.C §6314. 122 21st Century U.S. Port Competitiveness Initiative: Request for Public Comment, 81 FR 33657, (May 27, 2016). 123 Reynolds Hutchins, Uncle Sam Seeks Shipper Input on How to Fight Port Congestion, THE JOURNAL OF

COMMERCE, May 31, 2016, http://www.joc.com/regulation-policy/transportation-policy/us-transportationpolicy/uncle-sam-seeks-help-shippers-fighting-port-congestion_20160531.html. 124 Id. 125 Id.
17

signs in the Pacific Northwest, this remains a situation that has to be closely monitored by the FMC and 

U.S. port interests. 

This past year saw an increase in Canadian and Mexican inbound cargo diversion away from U.S. West 

Coast seaports. In 2015, Mexican ports led growth with a 9.9% year-over-year increase (compared to a 

9.2% increase in 2014), followed by a 6.8% growth at Canadian ports (7.0% increase in 2014), and 3.8% 

increase in U.S. ports (6.1% in 2014).126 Of the total inbound cargo handled at North American ports, U.S. 

ports saw around 19.9 million TEUS in 2015, Canadian ports saw 2.8 million TEUS, and Mexican ports saw 

2.3 million TEUS.127 As a result of port congestion, U.S. West Coast ports lost market share to Canadian 

and Mexican competitors while industries using the ports lost billions of dollars.128

However, the West Coast is responding to competitive demands. With cargo volumes at the Port of Los 

Angeles returning to normal, a new fully-automated and environmentally friendly container terminal 

opening at the Port of Long Beach, and the benefits of the Northwest Seaport Alliance beginning to show, 

ports up and down the West Coast of the United States are looking to make cargo gains in 2016. These 

ports have both the responsibility and the ability to regain cargo lost to neighboring foreign ports, as well 

as attracting future trade into their facilities.

Annex

In preparation for this fourth annual update we have identified several vital issues that are touched upon 

in this study which have broader implications and are worthy of note during this year and in the future.

Legacy of Previous Years

Problems and Inefficiencies That Lead to Congestion

Continued Equipment Shortages

Chassis shortages have continued to plague the U.S. intermodal commerce system. Last year’s report 

identified a provision in the ILWU-PMA agreement requiring safety inspections of certain chassis by ILWU 

workers, as having the potential to cause significant delays.129

Chassis shortages represent a serious issue as ocean carriers have dropped out of the chassis business 

allowing equipment leasing companies to take over. During the last several years, container lines have 

transferred an estimated 90% of their U.S. chassis to leasing companies or other entities, in an effort to 

cut costs.130 Despite reiterating they have left the chassis leasing business, ocean carriers continue to 

 

126 Salisbury, supra note 1. 127 Id. 128 Hutchinson, supra note 43. 129 Federal Maritime Commission, supra note 88, at 11. 130 Joseph Bonney, U.S. Truckers: Container Lines Retain Too Much Control over Chassis, THE JOURNAL OF

COMMERCE, Mar. 3, 2016, http://www.joc.com/trucking-logistics/drayage/us-truckers-container-lines-retain-toomuch-control-over-chassis_20160303.html. 
18

stipulate specific chassis leasing companies in contract agreements. As a result, truckers are finding it 

increasingly difficult to obtain the specified chassis before picking up cargo at West Coast Ports. To cover 

for the lack of chassis, chassis-leasing companies rolled out a “pool-of-pools,” in which the three major 

chassis providers in Southern California guaranteed equipment availability at major ports by maintaining 

a massive pool of available chassis.131 However, chassis shortages continue.132 Truckers are finding it 

increasingly difficult to meet ports’ mandatory appointment times as they are not able to obtain the 

proper chassis specified by the ocean carrier.133

The Federal Maritime Commission as well as several other U.S. government agencies have begun to look 

into congestion as a result of chassis availability. The U.S. Department of Commerce’s Advisory Committee 

on Supply Chain Competitiveness (ACSCC), issued a series of recommendations earlier this year noting 

that, “equipment shortage blocks containers from leaving the port, overwhelming terminal space and 

leading to delay charges.”134

ACSCC issued three recommendations regarding the improvement of container chassis availability and 

container flow: 

1) “The Federal Government, including the Federal Maritime Commission, should facilitate the 

establishment of agreements among interested seaports, terminal operators, equipment 

providers, and other stakeholders to create and operate common (“gray”) chassis pools, at 

those seaports where such agreements are not already in place. 

2) Motors carriers that provide port service should be encouraged to acquire and use their own 

chassis, with initiatives and assistance from industry partners to help financially constrained 

truckers to purchase or lease equipment.

3) The Federal Government, including the Secretary of Commerce, should reach out to the port 

labor-management groups on each coast to resolve any jurisdictional questions regarding 

gray pool chassis inspection and maintenance.”135 

While the Federal Maritime Commission does not have jurisdiction over chassis leasing companies, the 

Commission will undoubtedly continue to add the shipping public in any way that it can, to ensure fair and 

efficient practices.

 

131 Bill Mongelluzzo, LA-Long Beach, Chassis Lessors Form Neutral Chassis Pool, THE JOURNAL OF COMMERCE, Feb. 

28, 2015, http://www.joc.com/port-news/us-ports/chassis-leasing-companies-agree-formation-neutral-chassispool-los-angeles-long-beach_20150228.html. 132 Bill Mongelluzzo, Extended Free Time Contributes to Chassis Shortages in LA-Long Beach, THE JOURNAL OF

COMMERCE, Oct. 1, 2015, http://www.joc.com/port-news/us-ports/extended-free-time-contributes-chassisshortages-la-long-beach_20151001.html. 133 Bonney, supra note 131. 134 Advisory Committee on Supply Chain Competitiveness, U.S. Dep’t of Commerce, Recommendation to the 

Secretary of Commerce Regarding U.S. Seaport and Connecting Infrastructure Congestion, 3 (Jan. 21, 2016). 135 Id. at 6-7. 
19

PIERPASS 

As industry experts continue to analyze factors that contribute to marine terminal congestion, several 

suggest modifying the controversial PierPass traffic mitigation fee. 136

PierPass was put in place in 2005 at the Ports of Los Angeles and Long Beach to address congestion, 

security and air quality.137 The PierPass traffic mitigation fee currently charges $69.17 per TEU, Monday 

through Friday, 3:00 AM to 6:00 PM.138 The purpose of the charge is to encourage and incentivize cargo 

owners to move cargo during off peak hours and on weekends.139 John Cushing, President of PierPass, 

Inc., says the daytime charge was designed with the specific purpose of pushing traffic into nighttime 

shifts when freeways and roadways are less congested that during the day.140 According to Cushing, the 

PierPass program, “... continues to succeed in doing that.”141

PierPass has been a point of contention between terminal operators, beneficial cargo owners (BCOs) and 

trucking interests over the past several years. “PierPass causes congestion ...” says Weston LaBar, 

Executive Director of Harbor Trucking Association.142 The fee provides an incentive for trucks to line up 

outside ports until the 6:00 PM deadline, leading to further congestion. In an attempt to improve the 

traffic mitigation system, the Ports of Los Angeles and Long Beach will be implementing mandatory 

appointment systems this year to help mitigate truck traffic. The appointment systems will be on most of 

LA-Long Beach’s thirteen terminal operators. LaBar admits that the Harbor Trucking Association is open 

to appointment systems if they are effectively managed.143

Continued Construction of Mega Vessels

Just as the sailing of Malcolm McLean's SS IDEAL X marked the dawn of the container revolution, it might 

be said Maersk's order of 20 Triple E's in early 2011 ushered in the era of the mega container ships (18,000 

plus TEUS). Cost economics was the driving force behind Maersk’s decision to order the Triple E’s. 

Although never publically announced, David Skov, former head of Maersk’s Southern China market 

claimed the Triple E’s breakeven point was below 70% utilization.144 This brought slot costs down to 

record breaking levels, which translated to huge profits for carriers with these types of vessels in their 

inventories.

 

136 Bill Mongelluzzo, No Easy Solution to Problems Plaguing U.S. Ports, THE JOURNAL OF COMMERCE, Mar. 24, 2016, 

http://www.joc.com/port-news/us-ports/no-easy-solutions-problems-plaguing-us-ports_20160324.html. 137 PierPASS, About PierPass, https://www.pierpass-tmf.org/ (last visited Jun. 20, 2016). 138 Mongelluzzo, supra note 137. 139 PierPASS, supra note 138. 140 Mongelluzzo, supra note 137. 141 Id. 142 Id. 143 Id. 144 Greg Knowler, Maersk & New Containerships Economics 101, MARINELINK, Oct. 24, 2013, 

http://www.marinelink.com/news/containership-economics360173.aspx. 
20

Maersk’s Triple E order was soon followed by orders for these type of ships from other carriers not 

wanting to be left at a competitive disadvantage. The Maersk order, combined with record low interest 

rates on ship building loans, and competition between ship yards launched a ship buying frenzy among 

owners. Competition between shipyards brought the cost of an 18,000 TEU container ship down to about 

$200 million. Lower prices in the range of $190 million, as in the case of the Triple E’s, were offered to 

carriers placing multiple orders.145 In 2015 alone, eleven ships with a capacity of over 18,000 TEU were 

built. Since Maersk placed its order in 2011, twenty-one ships with a capacity of 18,000 plus TEUS have 

been launched, and this does not include the numerous ships in the 16,000 to 17,000 TEU range which 

were also purchased during the same time frame.146

The advent of the mega container ships has had mixed results. In a perfect world, where demand exceeds 

capacity, there is no doubt on the cost advantages the larger ships bring to their owners, but the current 

glut of orders for these ships, combined with a mild recession, has left these ships wanting of cargo. 

“During the last quarter of 2015, global shipping capacity increased by 7% while demand grew by only 1%. 

As a result, the price of shipping a container fell by nearly half.”147 Global capacity will increase by 4.5%in 

2016, and 5.6%in 2017; almost all of it due to new ships in the 18,000 plus TEU range.148 The excess 

capacity, combined with the recession allowed freight rates fell to record lows. Combined with record 

low volumes of cargo, record low freight rates, and unexpected congestion at ports ill prepared to handle 

vessels of such size, the record profits envisioned when these vessels were ordered are proving elusive, 

and has the trade wondering how much longer carriers can afford to run these ships before having to lay 

them up, much like they did with their overextended fleets in 2008. Even Saren Skou, CEO of Maersk Lines 

admits that it misjudged the container shipping market when it ordered the 20 Triple E’s.149 Since this 

2013 comment by its CEO, the reality of market conditions forced Maersk to lay up one of its Triple-E’s in 

October 2015 for the winter season, with the prospect of more layups possible150 

Is a New Port Balance the Way of the Future?

With the West Coast shipping industry returning to a sense of normalcy, it is likely that the West Coast 

U.S. ports will continue to see an increase in market share. The benefits of using West Coast ports as a 

 

145 Trip-E Class Container Ships, http://www.ship-technology.com/projects/triple-e-class/ (last visited Jun. 22, 

2016).

146 See Bill Mongelluzzo, 18,000 TEU Ship Call at LA Heralds New Era of Mega-Ships in U.S., THE JOURNAL OF

COMMERCE, Dec. 26, 2015, http://www.joc.com/maritime-news/container-lines/cma-cgm/18000-teu-ship-call-laheralds-new-era-mega-ships-us_20151226.html. 147 Adam Minter, Ships Have Gotten Too Big, BLOOMBERG, Jun. 14, 2016, 

http://www.bloomberg.com/view/articles/2016-06-14/ships-have-gotten-too-big. 148 Id. 149 Costas Paris, Maersk Line CEO: We Misjudged Container Ship Demand, THE WALL STREET JOURNAL, Sept. 26, 

2013, http://www.wsj.com/articles/SB10001424052702303342104579098680549111434. 150 Mike Wackett, Maersk Lays-Up a Triple E as Winter Nears and Idled Tonnage on a Million TEU, Oct. 28, 2015, 

http://theloadstar.co.uk/maersk-lays-up-a-triple-e-as-winter-nears-and-idled-tonnage-closes-on-a-million-TEU/. 
21

gateway into mainland United States still exist. For the time, labor disputes have settled down and 

congestion has diminished as a result.

Continued Benefit of West Coast vs. Canada/Mexico

In June of 2016, Xeneta, a Norwegian-based company that provides container freight rate benchmarking 

and market intelligence, revealed the top three reasons why freight shippers switch containership 

carriers: price, risk management, and loss of trust.151 The same can be said for why an ocean carrier will 

decide to switch ports. In a business that changes as rapidly as the container shipping industry, time is 

money. The ocean carrier’s cargo-laden vessels were spending massive amounts of money by waiting 

outside port. The increase in cost for a West Coast call lead to a lack of trust between carriers and U.S. 

West Coast ports. In some cases, carriers were driven to Canadian and Mexican ports through necessity 

and risk management. 

Data shows that cargo diversions has been occurring since far before 2012. The attractiveness of Canadian 

and Mexican ports still exists. Last year’s labor disputes and subsequent slowdown magnified the issue. 

However, the majority of shippers will likely revert back to West Coast U.S. ports despite the 

attractiveness of foreign ports if U.S. ports manage to automate, expand, and take steps to minimizing 

congestion. They can do this through infrastructure improvements to better handle inbound cargo from

mega-ships, improved turn-around time for truckers, and quicker resolutions to labor disputes. This is 

certainly feasible, and if successful, West Coast U.S. will continue to see containerships return to port as 

trust, price, and risk mitigation allow.

West Coast Infrastructure Improvements 

In order to hold onto market share recovered since the slowdown of 2014/2015 and compete with rapidly 

modernizing Canadian and Mexican ports, U.S. West Coast ports are going through large expansion 

projects. The Ports of Los Angeles and Long Beach are prepared for continued growth into the future. 

“The San Pedro Bay ports will revolutionize the industry,” says Jon Slangerup, chief executive of the Port 

of Long Beach.152 The LA/LB port complex is in the middle of a 10-year, $7 billion investment plan to 

rebuild marine terminals, raise cranes to accommodate mega ships, densify terminal operations through 

automation, and expand intermodal rail access.153

Improvements, including automation projects that will increase the ports throughput capabilities are 

currently underway at TraPac terminal in Los Angeles and Middle Harbor terminal in Long Beach. At full 

 

151 Hailey Desormeaux, Xeneta: Top Three Reasons Shippers Switch Container Carriers, AMERICAN SHIPPER, Jun. 9, 

2016, 

http://www.americanshipper.com/Main/News/Xeneta_Top_three_reasons_shippers_switch_container_64295.as

px. 152 Bill Mongelluzzo, LA, LB Ports Confident Investment, Productivity Will Spur Growth, THE JOURNAL OF COMMERCE, 

Dec. 17, 2015, http://www.joc.com/port-news/us-ports/port-long-beach/la-lb-ports-confident-investmentproductivity-will-spur-growth_20151217.html. 153 Id.
22

tilt, Middle Harbor will have an annual throughput capacity of 3.5 million TEUS (compared to Prince 

Rupert’s planned 1.35 million TEUs and Lázaro Cárdenas’ planned 4.1 million TEU throughput capacity at 

its TEC2 terminal).154 Additional improvements include BNSF rail’s proposed Southern California 

International Gateway, which will provide the ports with an additional large near-dock facility adjacent to 

Union Pacific’s ICTF facility about five miles from the harbor.155 A California Court has recently ruled 

against the original proposal for the railway, making its future uncertain.

156

The Port of Los Angeles has recently been approved a $1.17 billion budget for FY2016 and 2017 to 

continue port improvements.

157 The Port of Long Beach has recently completed Phase I of its $4 billion 

Middle Harbor expansion providing the terminal with full-automation and Super-Post-Panamax capable 

cranes capable of handling 20,000+ TEU vessels. Phase II of the terminal is on-schedule for 2019.158

In April of this year, The Northwest Seaport Alliance approved $141 million for terminal upgrades. Plans 

for the terminal include expansion and the installation of Super-Post-Panamax cranes at Husky Terminal 

and South Harbor. The expansion is the “... first major investment that the commissions will be approving 

in our harbors and gateway ...” said the Port of Seattle President, John Creighton, and represents “... a real 

historic moment for the alliance.”159

The Port of Tacoma’s Husky Terminal will receive reconstruction of Pier 4 to align it with Pier 3 to establish 

a continuous 2,960-foot berth. The expansion also includes at least two Super-Post-Panamax cranes to 

add to the two under construction.160 Improvements will allow two 18,000 TEU mega-ships to dock 

simultaneously. Construction is expected to be finished in 2018.161

The Northwest Seaport Alliance is taking a number of steps to stay competitive, including making The 

Northwest Seaport Alliance operational, terminal redevelopment projects, deepening channels, and 

undertaking operational improvements by working with customers and stakeholders to establish an 

Operations Service Center, greater visibility of shipment status, and managing gateway performance 

 

154 Id. 155 Id. 156 BNSF Railway, Latest News: Southern California International Gateway (SCIG) Ruling a Major Loss for Southern 

CA, http://www.bnsfconnects.com/latest-news (last visited Jun. 20, 2016). 157 See Bill Mongelluzzo, LA Port Approves Fiscal-Year Budget to Fund Ongoing Expansion, THE JOURNAL OF

COMMERCE, Jun. 3, 2016, http://www.joc.com/port-news/us-ports/port-los-angeles/la-port-approves-fiscal-yearbudget-expects-revenue-growth_20160603.html. 158 Bill Mongelluzzo, Long Beach: $4 Billion Plan Keeps Us Nimble as Industry Changes, THE JOURNAL OF COMMERCE, 

Jan. 21, 2016, http://www.joc.com/port-news/us-ports/port-long-beach/long-beach-4-billion-plan-keeps-usnimble-industry-changes_20160121.html. 159 Northwest Seaport Alliance Plans $141 Million in Terminal Upgrades, The Northwest Seaport Alliance, 

https://www.nwseaportalliance.com/news/4112016/northwest-seaport-alliance-plans-141-million-terminalupgrades (last visited Jun. 20, 2016). 160 Id. 161 Id. 
23

through mutually-agreed upon metrics.162 Both Seattle and Tacoma have major terminal modernization 

projects underway that will provide improvements allowing the port to handle larger ships, including 

having the right number and size cranes, enough container yard space, as well as an efficient road, rail, 

and gate complex with sufficient queue.

163

West Coast ports are hoping that infrastructure investments in the region “... position the waterfront for 

the future as bigger ships change the landscape.”164 In a recent 2015 Annual Report, the Pacific Maritime 

Association says that such investments, “are critical in helping the West Coast respond to competitive 

challenges from the opening of the Panama Canal ... growing Canadian ports, and modernized port 

facilities ... in the Gulf States and on the East Coast.”165

THE IMPACT OF THE AMENDMENTS TO THE INTERNATIONAL CONVENTION FOR THE SAFETY 

OF LIVES AT SEA, 1974

In 1974, the International Maritime Organization (IMO) adopted the International Convention for the 

Safety of Life at Sea (SOLAS) that is currently in force today.166 The SOLAS convention sets minimum 

standards for the construction of, equipment on, operation of ocean going ships.167 In 2010, the IMO 

initiated a study of the inaccuracy of container weights after improperly reported container weights were 

implicated in vessel causalities including the beaching of the MSC Napoli.168 As a result, in November 2014, 

the IMO issued amendments to the SOLAS Convention for provision of verified gross mass (VGM): 

 

162 E-mail from Staff Members at the Northwest Seaport Alliance (Jun. 23, 2016, 12:16 EST). 163 Id. 164 Pacific Maritime Association, 2015 Annual Report, June 2016, 20. 165 Id. 166 The first version of SOLAS was adopted in 1914 in response to the sinking of the Titanic. Between 1929 and 

1960, three additional versions of the convention came into effect. In 1974, the acceptance procedures – providing 

that “an amendment shall enter into force on a specified date unless, before the date, objections to the 

amendment are received from an agreed number of Parties.” International Maritime Organization, International 

Convention for the Safety of Life at Sea (SOLAS), 1974, 

http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/International-Convention-for-the-Safety-ofLife-at-Sea-(SOLAS),-1974.aspx (last visited Jun. 16, 2016). 167 International Maritime Organization, International Convention for the Safety of Life at Sea (SOLAS), 1974, 

http://www.imo.org/en/About/Conventions/ListOfConventions/Pages/International-Convention-for-the-Safety-ofLife-at-Sea-(SOLAS),-1974.aspx (last visited Jun. 16, 2016). 168 On January 18, 2007, the MSC Napoli was beached after the hull suffered structural damage during inclement 

weather in the English Channel. Once grounded, 660 of the remaining containers were weighed. Of those 660, 137 

were each more than 3.3 tons greater than their declared weight. In total, those 137 containers alone were 

approximately 344 tons over the weight listed on the manifest. Dennis Bryant, SOLAS is Critical to Seafarer and 

Cargo Safety, THE JOURNAL OF COMMERCE, May 24, 2016, http://www.joc.com/regulation-policy/transportationregulations/international-transportation-regulations/solas-critical-seafarer-and-cargo-safety_20160524.html (last 

visited Jun. 16, 2016). 
24

“4 In the case of cargo carried in a container, except for containers carrier on a chassis or 

trailer when such containers are driven on or off a ro-ro ship engaged in short international voyages as 

defined in regulation III/3, the gross mass according to paragraph 2.1 of this regulation shall be verified 

by the shipper either by: 

1) Weight the packed container using calibrated and certified equipment; or

2) Weighing all packages and cargo items including the mass of pallets, dunnage and other 

securing material to be packed in the container and adding the tare mass of the container to 

the sum of the singles masses, using a certified method approved by the competent authority 

of the State in which packing of the container was completed. 

“5 The shipper of a container shall ensure the verified gross mass is state in the shipping document. 

The shipping document shall be: 

1) Signed by a person duly authorized by the shipper; and 

2) Submitted to the master or his representative and to the terminal representative 

sufficiently in advance, as required by the master or his representative, to be used in 

preparation of the ship stowage plan.

“6 If the shipping document, with regard to a packed container, does not provide the verified gross 

mass and the master or his representative and the terminal representative have not obtained the verified 

gross mass of the packed container, it shall not be loaded on the ship.”169

The two main takeaways from the SOLAS Convention amendments are the requirement for the shipper 

to provide the verified weight of the container to the carrier and to the terminal operator sufficiently in 

advance of the sailing, and if the weight is not verified it will not be shipped. Further, the IMO issued 

methods in which the verification of VGM could be achieved: 

1) Weighing the packed container; or 

2) Weighing all packages and cargo items, including the mass of pallets, dunnage and other 

securing material to be packed in the container and adding the tare mass of the container to 

the sum of the single masses, using a certified method approved by the competent authority 

of the State in which packing of the container was completed. 

The U.S. Coast Guard, who has the primary responsibility for enforcing the SOLAS VGM amendments in 

the United States, issued a Marine Safety Information Bulletin on April 28, 2016 addressing the 

amendments declaring that “the existing U.S. laws and regulations for providing verified container weights 

 

169 International Maritime Organization, Verification of the Gross Mass of a Packed Container, International 

Convention for the Safety of Life at Sea (SOLAS), VI/2 (Nov. 2014). 
25

are equivalent to the requirements in SOLAS Regulation VI/2.”170 The Coast Guard also noted that there 

is a dynamic and flexible business relationship between parties in the export supply chain, and the 

equivalency allowed for flexibility to reach arrangements to ensure compliance.171 Further, the Bulletin 

acknowledged that shippers, carriers, terminals, and maritime associations had, to that point, outlined 

multiple acceptable methods for providing VGM, including “(1) the terminal [weighing] the container, and 

when duly authorized, [verifying] the VGM on behalf of the shipper, and (2) the shipper and carrier reach 

[an] agreement whereby the shipper verifies the weight of the cargo, dunnage, and other securing 

material, and the container’s tare weight is provided and verified by the carrier.”172

Prior to the Coast Guard determination of equivalency, the Ocean Carrier Equipment Management 

(OCEMA) issued a set of best practices that went to address the VGM requirements.173 The best practices 

issued by OCEMA were identical to the SOLAS regulations in that they required the shipper to weigh the 

container, however, the OCEMA regulations seemed to require that shippers weigh the container away 

from the port.174 These practices were met with widespread disapproval from shippers, with the primary 

concern being that they should not be held legally liable for the container weight, in the event the tare 

weight on the container is incorrect.175

In recent weeks there has been some agreement on methods that should be employed to implement 

the requirements. OCEMA carriers and six East Coast and Gulf ports filed an agreement with the FMC to 

discuss implementation of SOLAS.176 The Commission unanimously approved this agreement with 

expedited review on June 24, 2016, allowing the agreement to go into effect prior to the July 1st

implementation of the regulations.177 Further, in a statement issued on June 17, 2016, the Ocean Carrier 

Equipment Management Associations (OCEMA) acknowledged its strong support of the use of on-

 

170 United States Coast Guard, U.S. Declares an Equivalency to Regulation VI/2 of the International Convention for 

the Safety of Life at Sea (SOLAS), MSIB 009/16 (Apr. 28, 2016) https://www.uscg.mil/msib/docs/009_16_4-28-

2016.pdf. 171 Id. 172 Id. 173 Ocean Carrier Equipment Management Association, OCEMA Adopts Verified Gross Mass (VGM) Best Practice 

and VGM Process Map (Mar. 21, 2016). 

http://ocema.org/docs/OCEMA%20Press%20Release%20re%20OCEMA%20VGM%20Best%20Practice%20and%20

VGM%20Process%20Map.pdf

174 Chris Dupin, AgTC Expresses Relief from Carriers Using Port Scales to Meet VGM Requirement, AMERICAN

SHIPPER, Jun. 21, 2016, 

http://americanshipper.com/Main/News/img_srchttpwwwamericanshippercomUploadsPublicImage_64403.aspx?

source=SpecialCoverageOne. 175 JOC Staff, AgTC Tells US Exporters to Resist Some SOLAS Guidance from Carriers, THE JOURNAL OF COMMERCE, 

Feb. 26, 2016, http://www.joc.com/regulation-policy/transportation-regulations/international-transportationregulations/agtc-tells-us-exporters-resist-some-solas-guidance-carriers_20160226.html. 176 FMC Agreement No. 201233. 177 Federal Maritime Commission, Port Operations and Safety Discussion Agreement Clears FMC Regulatory Review, 

NR 16-10 (Jun. 27, 2016). http://www.fmc.gov/NR16-10/. 
26

terminal scales to weight containers. According to the statement, under the OCEMA Terminal Weighing 

Approach”, 

“U.S. ports and marine terminal operators could weigh containers moving through 

their truck gates and provide the gross container weights directly to the ocean carrier 

stowage planners. Shippers availing themselves of this option would not be required 

to provide a signature to the ocean carrier for each container, but would acknowledge 

that the use of on-terminal scaling provides a VGM.”178

This new development was positively received by members of the shipping public, including the leaders 

of AgTC, who were the strongest opponents to the previous methods suggested by OCEMA. 

Though much progress has been made, there is still more details to sort out, including which terminals 

will provide weighing services and whether they will charge for those services. For example, the Ports of 

Savannah and Charleston are offering weighing services for free while the Ports of Baltimore and New 

Jersey will charge.179 On the West Coast, members of both the West Coast MTO Agreement (WCMTOA) 

and the Oakland MTO Agreement have stated that they will continue to weight trucks arriving at their 

ports with containers as they have under the requirements of the Occupational Safety and Health 

Administration (OSHA) requirements.

180 They will continue to provide the weights to the ocean carriers 

for use at their discretion, and the trucker provided weight of the truck and the chassis, or a formula using 

average truck tractor weight and chassis weight, can be deducted from the gross weight as a manner of 

calculating the gross mass of the container.181

While the previous mentioned developments are welcome, the discussion regarding who is going to 

provide the VGM to the carriers has not been resolved. There has been push back from the marine 

terminal operators (MTOs) regarding the OCEMA Terminal Weighing Approach. The National Association 

of Waterfront Employers (NAWE) issued a statement on denouncing the notion that, “marine terminal 

operators who have no continuing commercial or insurable interest in the shipper’s cargo, should bail 

everyone out of the impending requirements.”182

 

178 Ocean Carrier Equipment Management Association, OCEMA Supports Terminal Weighing Approach for VGM,

(Jun. 17, 2016). http://agtrans.org/wp-content/uploads/2016/06/OCEMA-Press-Release-re-Terminal-WeighingApproach.pdf. 179 Bill Mongelluzzo, Largest Seattle Terminal Will Not Generate VGM Data for Shippers, THE JOURNAL OF

COMMERCE, Jun. 8, 2016, http://www.joc.com/port-news/us-ports/port-seattle/largest-seattle-terminal-will-notgenerate-vgm-data-shippers_20160608.html. 180 Chris Dupin, West Coast terminals to continue weighing containers after July 1 SOLAS implementation, AMERICAN

SHIPPER, Jun. 03, 2016, http://www.americanshipper.com/main/News/64232.aspx?source=Slider. 181 Id. 182 National Association of Waterfront Employers, Press Release, (Jun. 22, 2016) https://www.nawe.us/issuessolas-verified-cargo-weights.shtml.
27

It should be noted that though some industry parties have suggested that the new VGM requirements 

will lead to congestion at U.S. ports, the true effect of VGM on congestion will not be known until well 

after July 1. For its part, the IMO has suggested that administrators and authorities should take a “practical 

and pragmatic” approach when enforcing the VGM amendments for the first three months following 

implementation.

183 Further, it remains to be seen whether shippers will divert export cargo to ports where 

VGM weighing services are provided on the terminals. However, it would be logical to conclude that if 

VGM regulations do lead to additional congestion at US ports, the industry could see shippers divert more 

cargo to different ports as was done in the wake of the 2014-2015 congestion crisis on the West Coast. 

Panama Canal Expansion

Renovations to the Panama Canal have the potential to have a substantial impact on cargo diversions 

away from the U.S. West Coast the Atlantic and Gulf ports. The expansion opened on June 26 of this year

with the passage of the COSCO SHIPPING PANAMA through the Cocolí. The nine-year, $5.4 billion 

expansion more than doubles the canal’s cargo capacity. A third channel is being added to the canal to 

accommodate vessels up to 14,000 TEUS.

184 While the canal still will not be able to handle some of the 

modern mega-ships with upwards of 18,000 TEUS, it is still a massive upgrade over the Canal’s former 

passage, which struggled with vessels of 5,000 TEUS.

The expansion was necessary for the Panama Canal to maintain a competitive in the international shipping 

industry. The expansion shortens the route between Asian markets and the U.S. East Coast by five days.

So far, 136 ships that previously would not have been able to fit through the pre-expansion canal have 

made reservations to navigate the new route.185 Six vessel strings, four from CKYHE alliance and two from 

the G6 alliance have announced enhanced services with ships between 6,000 and 10,000 TEUS.186 MSC 

has replaced Panamax ships with 8,000-9,000 TEU vessels for its Europe-West Coast South America route 

through the canal. The 2M alliance plans to shift one Asia-East Coast currently running through the Suez 

Canal to Panama.187

Expansion will no doubt have an effect on U.S. West Coast ports. According to a recent report by Boston 

Consulting Group and C.H. Worldwide Inc., the expansion is expected to shift about 10% of the Asia-to-

 

183 International Maritime Organization, Advice to Administrations, Port State Control Authorities, Companies, Port 

Terminals and Masters Regarding the SOLAS Requirements for Verified Gross Mass of Packed Containers, 

MSC.1/Circ. 1548 (May 23, 2016) 

http://www.imo.org/en/MediaCentre/HotTopics/container/Documents/MSC.1Circ.1548%20Advice.pdf. 184 Costas Paris, Robbie Whelan, Kejal Vyas, The Panama Canal Expands, THE WALL STREET JOURNAL, Jun. 20, 2016, 

http://www.wsj.com/articles/the-panama-canal-expands-1466378348?mod=trending_now_4. 185 Id. 186 Joseph Bonney, Panama Canal Expansion Will Affect Shipping – But How?, THE JOURNAL OF COMMERCE, Jun. 25, 

2016, http://www.joc.com/port-news/panama-canal-news/panama-canal-expansion-will-affect-shippinghow_20160625.html. 187 Id.
28

U.S. container traffic from West Coast ports to the East Coast.188 An earlier report, written by an 

organization of West Coast interests called “Beat the Canal” estimated the expansion would shift 20% of 

West Coast cargo to the East and Gulf Coasts. The industry has responded to the expansion. On the East 

Coast, ports hope that the expansion will continue the trend of larger ships calling at East Coast ports to 

avoid West Coast Congestion.189 On the U.S. West Coast, ports are confident that multi-million dollar 

expansion projects will help maintain a competitive advantage over East Coast ports.190 Meanwhile, the 

Canadian National Railway is teaming with the Port of Mobile in hopes of establishing an intermodal 

railway through the American heartland.191 The effects of the Panama Canal expansion likely will not be 

seen for several months, but that doesn’t stop the industry from preparing for the future. 

 

188 Id. 189 Bonney, supra note 185. 190 See Pacific Maritime Association, supra note 165. 191 See Szakonyi, supra note 91.