FEDERAL MARITIME COMMISSION 

STATEMENT OF COMMISSIONER RICHARD A. LIDINSKY, JR. 

THIRD ANNUAL UPDATE: 

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

2014: Diversion, Expansion, and Congestion 

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

Cargo Moving through Canadian and Mexican Seaports (“2012 Study”). Consistent with our practice 

since the release of that study, I am pleased to present this third update. 

Since the release of the 2012 Study, the container shipping industry has seen significant developments 

that were aimed at making U.S. ports more competitive with their Canadian and Mexican counterparts. 

Last year, the Water Resources Reform and Development Act of 2014 (WRRDA), Pub. L. No. 113-121, was 

signed into law. WRRDA allows for the use of the Harbor Maintenance Trust Fund (HMTF) for port and 

harbor maintenance, in addition to dredging. This year saw the House of Representatives pass the Fiscal 

Year 2016 Energy and Water Appropriation Bill, H.R. 2028, which includes amendments to increase the 

amount allocated for Harbor Maintenance Trust Fund expenditures by $36.3 million, and to guarantee 

that expenditures from the Army Corps of Engineers’ Operations and Management (O&M) account 

complied with WRRDA. The Senate Appropriations Committee also approved a bill that guarantees the 

Harbor Maintenance Tax (HMT) funding targets specified in WRRDA for FY 2016 will be met. 

Within the last year, vital members of the supply chain serving American consumers have begun to 

address issues affecting the competitiveness of U.S. ports. The Ports of Seattle and Tacoma began the 

process of entering into a competitive working agreement that will allow the two ports to exchange 

information and combine efforts to find synergies that allow them to compete more effectively with 

international ports. The Ports of Los Angeles and Long Beach also entered into an agreement, allowing 

the ports to discuss and agree on projects and programs that address transportation infrastructure 

needs and reduce pollution caused by port-related activities. In addition, the Ocean Carrier Equipment 

Management Association (OCEMA), the West Coast MTO Agreement (WCMTOA), and almost every 

vessel-operating carrier and marine terminal operator serving U.S. West Coast ports, together formed 

the Pacific Ports Operational Improvements Agreement (PPOIA). PPOIA authorizes the parties to discuss 

and exchange information, and reach agreement on measures that address and improve the efficiency 

of operations at U.S. West Coast port facilities, to aid in the reduction of congestion. 

However, U.S. ports are still facing challenges that impact their ability to compete with international 

ports. International ports are continuing to grow and expand faster than U.S. ports. The Port of Prince 

Rupert (Canada) is North America’s fastest growing port at 13.8% year-over-year, followed by the Port 

of Manzanillo (Mexico) at 11.23%. Larger ships, new alliances, labor-management disputes, and 

equipment and trucking shortages have contributed to the already building congestion at U.S. ports, 

with the most severe effects felt on the West Coast. As a result, shippers have been diverting cargo to 

different routes and ports to lessen delays. 

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Throughout this report we have used data and sources such as The Wall Street Journal, The Journal of 

Commerce and PIERS, Lloyd’s List, various port authorities, as well as private sources. Each source is 

cited where appropriate. 

As with other updates, the views and/or opinions expressed herein are my own and not the official 

policy of the FMC. I would like to extend thanks to the Commission staff who participated in the writing 

of this update, with special thanks to Jewel Jennings-Wright and Marcus Foster in my office. 

Richard A. Lidinsky, Jr. 

Commissioner 

Federal Maritime Commission 

Washington, D.C. 

June 30, 2015 

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PART ONE: 2014 UPDATE 

2014 NORTH AMERICAN CONTAINER TRADE 

Collectively, container trade grew 2.5% in 2014, totaling approximately 39.9 million twenty-foot 

equivalent units (TEUS).1 U.S. ports led all North American ports, handling close to 31.6 million TEUS 

(79.1% of the total container trade in North America), while Canadian ports handled about 4.7 million 

TEUS (11.7%) and Mexican ports handled almost 3.7 million TEUS (9.2%).2 

Total North American Container Trade -2014 

Country TEUS Handled Percentage of 

Trade 

United States 31,563,913 79.1% 

Canada 4,675,475 11.7% 

Mexico 3,682,730 9.2% 

Total North America 39,922,118 100.0% 

Though U.S. ports still lead all North American ports in TEUS handled, Mexican ports experienced the 

highest year-over-year growth at 3.5%. United States ports grew 2.6%, and Canadian ports grew 1.4%.3 

The Port of Prince Rupert, located in British Columbia, Canada, was North America’s fastest growing 

port, growing 13.8% year-over-year.4 Mexico’s Port of Manzanillo narrowly edged out the Port of Boston 

as the second fastest growing port at 11.23% year-over-year, compared to 11.20%.5 It should be noted 

that the Port of Boston reported a more conservative 10.5% year-over-year, still making them the third 

fastest growing port in North America.6 

Fastest Growing North American Ports (TEUS) 

2013 2014 

Port Inbound Outbound Inbound Outbond 2013 Total 2014 Total Y-O-Y % Change 

Prince Rupert 301,804 151,624 358,902 156,998 453,428 515,900 13.8% 

Manzanillo 901,359 655,924 1,032,464 699,695 1,557,283 1,732,159 11.2% 

Boston 98,154 66,204 106,771 74,847 164,358 181,618 10.5% 

South Carolina Ports 665,972 625,625 742,763 682,548 1,291,597 1,425,311 10.4% 

New Orleans 81,004 220,040 92,933 238,148 301,044 331,081 10.0% 

1 Marsha Salisbury, Ports of Prince Rupert, Manzanillo Lead Growth, THE JOURNAL OF COMMERCE, May 18, 2015, at 44,
"

46-48.
" 2 Id.
" 3 Id. 4 Id. See also, Prince Rupert Port Authority, Monthly Traffic Summary for Dec. 2014, 1 (Jan. 6, 2015),
"

http://files.rupertport.com.s3.amazonaws.com/snapshots/95/Monthly%20TEU%20Cargo%20SummaryTEU%20-

%20DEC%202014.pdf?Expires=1436283780&AWSAccessKeyId=AKIAJT7NKA535OKDFPBQ&Signature=qVyiMw8Bqx
"

7De8pPq%2F5CkOwtXVI%3D (last visited May 21, 2015). 5 Salisbury, supra note 1, at 44. 6 Massachusetts Port Authority, Port of Boston Container Volumes, 

https://www.massport.com/media/296397/Port-of-Boston-Container-Volumes.pdf (last visited May 21, 2015).
"

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Inbound trade saw Mexican ports lead growth with a 9.2% year-over-year increase, followed by 7% in 

Canadian ports, and 6.1% in U.S. ports.7 Of the total inbound cargo handled at North American ports, 

U.S. ports saw 19.1 million TEUS in 2014. Canadian ports saw 2.66 million, and Mexican ports saw 2.14 

million. 

Total North American Inbound Container Trade Growth 

Country 2013 2014 Y-O-Y % Change 2013 % of Total 2014 % of Total 

United States 

Canada 

Mexico 

18,014,693 

2,489,155 

1,959,857 

19,106,412 

2,663,543 

2,140,798 

6.1% 

7.0% 

9.2% 

80.2% 79.9% 

11.1% 11.1% 

8.7% 9.0% 

Total 22,463,705 23,910,753 6.4% 100.0% 100.0% 

This represented a 0.3% decrease in overall container trade handled by U.S. ports (80.2% versus 79.9%), 

while Mexico experienced a 0.3% increase in overall container trade handled. The amount handled by 

Canadian ports remained constant.8 

CARGO DIVERSION 

CANADIAN PORTS 

The Port of Prince Rupert 

In the original Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican 

Seaports, the Port of Prince Rupert (Prince Rupert) was examined. In the three years since the issuance 

of the original report, Prince Rupert has become a significant competitor of the West Coast ports. 

Prince Rupert advertises itself as having “significant competitive advantages over other West Coast 

ports.”9 These advantages include being 68 hours closer to Shanghai than Los Angeles, natural channel 

depth, “state-of-the-art” facilities, and access to efficient rail.10 It is also 36 hours (a day and a half) 

closer to Shanghai than the Puget Sound ports.11,12 

As mentioned above, Prince Rupert grew 13.8% year-over-year in 2014, making it the fastest growing 

North American port. Private sources state that as much as 61.8% of cargo imported into Prince Rupert 

in 2014 had a final destination somewhere in the United States, compared to 57.2% in 2013. As a result, 

of the 359,959.50 loaded TEUS shipped into Prince Rupert, approximately 222,455 TEUS were 

transshipped to a destination in the United States. In 2013 that number was approximately 173,796 

TEUS. 

7 Salisbury, supra note 1, at 44. 8 Id. 9 Port of Prince Rupert Port Authority, Competitive Advantages, http://www.rupertport.com/trade/advantages
"

(last visited May 21, 2015). 10 Id. 

11 Peter Robison and Thomas Black, Buffet Railroad’s Shale Focus Blunts Ports’ Comeback Bid, BLOOMBERG, Oct. 31, 

2014, http://www.bloomberg.com/news/print/2014-10-31/buffett-railroad-s-shale-focus-blunts-comebackbid.html. 12 The Port of Seattle and the Port of Tacoma
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Port of Prince Rupert - TEUS Handled (By Destination)
'

Country of Destination 2014 % 2013 % % Change Y-O-Y

 United States 

 Canada 

222,455 61.8% 

137,505 38.2% 

173,796 

130,044 

57.2% 

42.8% 

28.0%

5.7% 

Total 359,960 100.0% 303,840 100.0% 18.5% 

There are also planned expansion projects that will increase the port’s capacity. Maher Terminals 

announced in March 2015 that it will be expanding its terminal operation at Prince Rupert to allow it to 

handle 1.3 million containers. Its current capacity is 850,000.13 This represents an annual capacity 

increase of 60%.14 Shortly after the announcement of the planned expansions, DP World, based in 

Dubai, United Arab Emirates, announced that it would be purchasing the terminal. DP World plans to 

continue on with the slate of announced expansions, and “undertake feasibility assessments in relation 

to development of the lands intended for further expansion which could potentially increase the 

capacity to 2.45 million TEUS.”15 DP World also owns Centerm terminal in Port Metro Vancouver. 

Canadian National Railway Co. (CN) has begun to place advertisements for the expansion to the 

terminal, projecting the terminal to open in second quarter 2017.16 

Port Metro Vancouver 

Port Metro Vancouver (Vancouver) is Canada’s largest port. Vancouver 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.17 Of the twenty-eight marine cargo terminals, Vancouver has four commonuser container terminals supported by fourteen transloading facilities, and three container storage and 

maintenance facilities.18 Vancouver boasts that it is, “the most diversified port in North America... 

[operating] across five business sectors: automobiles, breakbulk, bulk, container, and cruise.”19 

Terminals in Vancouver are planning and making infrastructure investments in anticipation of handling 

more cargo destined for the United States. GCT Global Container Terminals stated that it plans to spend 

several hundred million dollars to increase its Vancouver terminals’ capacity and fluidity in anticipation 

of handling more U.S.-bound cargo and Canadian volume, which will include spending more than C$200 

13 Prince Rupert Port expanding to handle 500,000 more containers annually, THE VANCOUVER SUN, Mar. 10, 2015, 

http://www.vancouversun.com/Prince+Rupert+Port+expanding+handle+more+containers+annually/10877349/sto
"

ry.html.
" 14 David George-Cosh, Canada’s Railroads Look to Peel Away More U.S. Imports, THE WALL STREET JOURNAL, May 14,
"

2015, http://www.wsj.com/articles/canadas-railroads-look-to-peel-away-more-u-s-imports-1431624752. 15 Chris Dupin, DP World buys Prince Rupert container terminal, AMERICAN SHIPPER, Apr. 03, 2015,
"

http://www.americanshipper.com/Main/News/DP_World_buys_Prince_Rupert_container_terminal_59874.aspx.
" 16 CN Advertisement, THE JOURNAL OF COMMERCE, May 18 2015, back cover. 17 Port Metro Vancouver, About Us, http://www.portmetrovancouver.com/en/about.aspx (last visited Jun. 4, 

2015). 

18 Port Metro Vancouver, Container,
"

http://www.portmetrovancouver.com/en/portusers/landoperations/terminalsandfacilities/container.aspx (last 

visited Jun. 29, 2015). 

19 Id. 

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million to expand on-dock rail capacity at GCT’s Deltaport terminal by 2017.20 (GCT is also planning to 

upgrade the equipment at Vanterm, the smaller of its two terminals, to give the terminal a 40% increase 

in yard capacity.)21 Deltaport has already seen an increase in its U.S. bound cargo from 6%-8% in 2008 to 

38% currently.22 GCT also indicated that it was only planning for long term cargo diversions and not, 

“one-off diversions of cargo from congested U.S. West Coast ports,” with Eric Waltz, president of GCT 

Canada, stating, “the company will only take volume it can handle and for customers who see shipping 

through Vancouver as a ‘long-term fit.’”23 

CANADIAN RAIL – CANADIAN NATIONAL EXPANDS 

The backbone of the Canadian ports’ ability to divert cargo from the U.S. West Coast is Canada’s railway 

system. Canadian National Railway Co. (“CN”) announced in March 2015 plans to build a US$210 million 

container terminal outside of Toronto. The terminal is designed to serve as the new intermodal hub that 

will, according to CN President and CEO Claude Mongeau, “...benefit our customers and the regional 

economy by improving central Canada’s access to the key transborder market as well as the Pacific and 

Atlantic coast trade gateways [CN serves]...”24 The terminal is projected to increase the railroad’s 

Toronto capacity by approximately 350,000 containers.25 

MEXICAN PORTS 

Mexican ports have been touted as contenders for cargo diverted from the U.S. West Coast. However, 

unlike the Canadian ports, Mexican ports face geographical disadvantages. For example, it takes roughly 

four to five days longer to sail from Shanghai to Lazaro Cardenas than from Shanghai to Los Angeles and 

Long Beach. Furthermore, the distance from Lazaro Cardenas to Chicago is more than 200 miles longer 

than from Los Angeles and Long Beach.26 Industry insiders suggest container volume has grown at 

Mexican ports due to strong demand as a result of the North American Free Trade Agreement (NAFTA), 

lower labor costs than China, as well as a broader economic growth.27 

In October 2014, Kansas City Southern Railway (KCS), which has rail connecting Lazaro Cardenas to the 

United States, reported talking to ocean carriers and beneficial cargo owners about potentially diverting 

shipments bound for the U.S. Gulf region away from Los Angeles-Long Beach.28 Though they have not 

20 Mark Szakonyi, Vancouver terminal operator invests to handle more US cargo, THE JOURNAL OF COMMERCE, Jan. 30, 

2015, http://www.joc.com/port-news/international-ports/port-metro-vancouver/vancouver-terminal-operatorinvests-handle-more-us-cargo_20150130.html.
" 21 Id. 22 Id. 23 Id. 24 CN to build new C$250-million intermodal and logistics hub in Milton, Ont., west of Toronto, Canadian National
"

Railway Co., Mar. 17, 2015, https://www.cn.ca/en/news/2015/03/pressrelease_20150317011634_2091.
" 25 David George-Cosh, Canada’s Railroads Look to Peel Away More U.S. Imports, THE WALL STREET JOURNAL, May 14,
"

2015, http://www.wsj.com/articles/canadas-railroads-look-to-peel-away-more-u-s-imports-1431624752.
" 26 Mark Szakonyi, Mexican port unlikely to win big from West Coast rerouting, THE JOURNAL OF COMMERCE, Mar. 5,
"

2015, http://www.joc.com/port-news/international-ports/mexican-ports-unlikely-win-big-west-coastrerouting_20150305.html. 27 Mexican Ports Unlikely to Gain US-Bound Cargo, THE JOURNAL OF COMMERCE, Mar. 23, 2015, at 6. 28 Id. 

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begun to transship any “significant” importers from Lazaro Cardenas, the railroad continues to carry on 

talks with carriers and their customers about this option.29 

There is some evidence of shippers sending cargo through Mexico as opposed to Los Angeles-Long 

Beach. For example, big-box retailer Costco reported shipping, “50,000 truckloads and containers 

annually into Mexico.”30 It was reported that over the last 20 years, Costco has shifted from importing 

goods through Los Angeles-Long Beach to having the port of entry into the United States being Laredo, 

Texas by routing more cargo through Lazaro Cardenas.31 

The Mexican government is investing $5 billion into its port network with at least 25 major projects 

planned.32 The Port of Veracruz is thought to be a major beneficiary of this influx of capital, with an 

expansion planned that would increase the facility’s capacity to 88 million tons.

33 There is also a plan to 

add 35 new berths, and the construction of a 13-mile double-track railway bypass, among other 

infrastructural improvements. Construction is scheduled for completion in 2030.34 

U.S.-MEXICAN RAIL 

Several United States-based railroads are beginning to increase their activity in Mexico. BNSF Railway, 

the second-largest freight rail network in North America, launched an all-rail U.S.-Mexico service in May 

2014, partnering with the Mexican railroad Ferromex.35 The service runs from Chicago, Illinois, to El 

Paso, Texas, at which point there is a “steel wheel interchange” of the cargo to Ferromex, which then 

routes to Silao, Mexico.36,37 

Union Pacific Railroad has also partnered with Ferromex to provide cross-border intermodal services 

from the United States to Mexico, running from Chicago to Monterrey, Mexico. Union Pacific has been 

operating in Mexico since 1998. On April 1, 2014, Union Pacific opened a $400 million intermodal hub in 

Santa Teresa, New Mexico, which also attracts cargo going across the U.S.-Mexico border.38 

With intermodal rail continuing to grow and aid container trade in Mexico, the cross-border trade 

between the United States and Mexico will most likely continue to grow. Whether this will equate to an 

increase in cargo diverting to Mexico from the U.S. West Coast remains to be seen. 

29 Id.
" 30 Mark Szakonyi, Mexican shippers increasingly turning to intermodal to protect cargo from theft, THE JOURNAL OF
"

COMMERCE, Sep. 25, 2014, http://www.joc.com/rail-intermodal/intermodal-shipping/mexican-shippersincreasingly-turn-intermodal-protect-cargo-theft_20140925.html.
" 31 Id. 32 Reynolds Hutchins, Mexico’s Port Push, THE JOURNAL OF COMMERCE, May 18, 2015, at 34-35. 33 Id. at 38. 34 Id. 35 Mark Szakonyi, BNSF taps growing U.S.-Mexico intermodal volume with new service, THE JOURNAL OF COMMERCE,
"

Sep. 25, 2014, http://www.joc.com/rail-intermodal/class-i-railroads/bnsf-taps-growing-us-mexico-intermodalvolume-new-service_20140925.html. 36Id. 37 A “steel wheel exchange” happens when a direct rail to rail handoff occurs without a truck move. 38 Szakonyi, BNSF taps growing U.S.-Mexico intermodal volume with new service. 

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CONGRESSIONAL 

Harbor Maintenance Tax 

The Water Resources and Development Act of 2014 (WRRDA) 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 HMTF’s original purpose of providing funding for the maintenance and dredging of U.S. 

ports and harbors. This comes after longstanding complaints of collected monies not being spent. The 

law sets the annual HMTF target percentage expenditures, increasing each year until FY 2025 when 

100% of the collected funds will go towards operation and maintenance (O&M) activities.39 Further, the 

law allocates 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.40 The target for FY 2016, the first year of increases, is for 69% of the HMT revenues 

collected, or $1.25 billion, to be expended. 

In May 2015, the House of Representatives passed H.R. 2028, the Fiscal Year 2016 Energy and Water 

Appropriations bill, with two amendments directly related to expenditures of funds in the HMTF. The 

original FY 2016 budget presented missed the projected mark outlined under the WRRDA by about $66 

million.41 The first amendment, introduced by Representatives Bill Huizenga (R-MI), Charles Boustany, 

Jr. (R-LA), and Janice Hahn (D-CA), increased the appropriation of the HMT spending by $36.3 million.42 

The second amendment, introduced by Peter DeFazio (D-OR), Ranking Member of the Transportation 

and Infrastructure Committee; Grace Napolitano (D-CA), Ranking Member of the Transportation and 

Infrastructure Subcommittee on Water Resources and Environment; and Ted Poe (R-TX), Congressional 

Port Caucus Co-Chair, was aimed at guaranteeing that expenditures from the Army Corps of Engineers’ 

O&M account complied with the WRRDA’s target spending levels and allocation formulas.

43 

In May 2015, the Senate Appropriations Committee passed a companion bill that would provide $1.25 

billion for port maintenance.44 The Senate bill included $50 million in funding for donor ports. Senators 

Patty Murray (D-WA) and Maria Cantwell (D-WA) pushed for the $50 million additional funding, wanting 

to use the funding to reimburse shippers who pay the HMT.45 

39 Water Resources Reform and Development Act of 2014, Pub. L. No. 113-121
" 40 Id. at § 2106.
"

This section defines a donor port as a port: 1) that is subject to the harbor maintenance fee, 2) at which the total
"

amount of harbor maintenance taxes collected comprise not less than $15 million annually of the total funding of
"

the Harbor Maintenance Trust Fund; 3) that received less than 25% of the total amount of harbor maintenance
"

taxes collected in the previous five fiscal years; and 4) that is located in a state in which more than 2 million cargo 

containers were unloaded from, or loaded onto, vessels in FY2012. 

41 The Journal of Commerce Staff, Fulfilling WRRDA’s Promise, THE JOURNAL OF COMMERCE, Jun. 15 2015, at 24-25. 42 Energy and Water Development and related Agencies Appropriations Act, 2016, H.R. 2028, 114th Cong. (as
"

passed by House of Representatives, May 1, 2015). 

43 Id. 44 Fulfilling WRRDA’s Promise, at 24-25. 45 Id at 25. 

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GAO Study 

On April 16, 2015, Senator Deb Fischer (R-NE) sent a letter to the U.S. Government Accountability Office 

(GAO) asking that it look into the quantitative and qualitative costs of the slowdown at the West Coast 

ports that are compounding significant congestion at the ports (discussed in more detail below). Senator 

Fischer asked GAO to complete the report in 18 months, stating: 

“West Coast ports, in particular, are key hubs for international trade, handling nearly 

half of all U.S. maritime imports and exports, including inputs for manufacturers in 

Nebraska and across the United States... Freight infrastructure, such as railroads, 

inland highways, and highways, is essential to the efficient flow of goods through our 

nation’s ports.”46 

Multimodal Freight Bill 

On June 25, 2015, Senators Cantwell, Murray, Cory Booker (D-NJ), and Edward Markey (D-MA), 

introduced The National Multimodal Freight Policy and Investment Act (S. 1680), which is designed to 

implement a comprehensive and strategic plan to improve the condition and performance of the 

national multimodal freight network, to ensure that the U.S. maximizes its competitiveness in the global 

economy.47 If passed, the bill would authorize $2 billion for each fiscal year starting in FY 2016 through 

FY 2021 in various multimodal freight projects, including $150 million for grade separations to reduce 

truck and rail network delays, eliminate congestion, and reduce highway/rail conflict, as well as $50 

million for repairs to last mile short-line rail that connects to agricultural and industrial centers.48 

46 Letter from Debra Fischer, U.S. Sen., to Hon. Gene Dodaro, U.S. Comptroller Gen., Gov’t. Accountability Office 

(Apr. 15, 2015) (on file with author), available at
&

https://www.intermodal.org/assets/docs/senfischerlettertogao.pdf.
" 47 National Multimodal Freight Policy and Investment Act, S. 1068, 114th Cong. § 2 (2015). 48 Id. 

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PART TWO: CARGO DIVERSION AS A RESULT OF PORT CONGESTION 

THE FMC AND PORT CONGESTION 

During the fall of 2014, the Federal Maritime Commission (FMC) held four public forums regarding port 

congestion.49 Public notice was given prior to these forums, inviting the public and stakeholders in the 

nation’s ports to submit comments regarding the issues facing U.S. ports, and meet with Commissioners 

to discuss these issues. Participating in these forums were representatives of various stakeholders, 

including port authorities, marine terminal operators, ocean common carriers, motor carriers, chassis 

owners and lessors, organized labor, and shippers, as well as government agencies. 

While each port region had congestion factors that were specific to its locale, the forums uncovered 

several uniform factors contributing to congestion: new alliances creating terminal inefficiency with 

increased vessel size and poor preparation for unloading at the terminal, chassis unavailability, and long 

drayage turn times and truck shortages. Also widely discussed at the forums was that shippers were 

experiencing an unexpected increase in demurrage and detention fees. The South Atlantic and Gulf 

Coast ports also reported the need for port and surrounding highway infrastructure investments. They 

were less congested than their Mid-Atlantic, Northeast, and West Coast counterparts, as they are ports 

that handle more exports than imports. (Details and transcripts of these forums can be found on the 

FMC website.)50 As a result of the findings from each of the forums, Chairman Cordero made congestion 

at U.S. ports the primary focus of 2015, stating that, “the efficient operation of the [n]ation’s ports is 

squarely within [the FMC’s] mandate and paramount to the Commission’s responsibilities.”51 

On April 13, 2015, the FMC published a report entitled Rules, Rates, and Practices Relating to Detention, 

Demurrage, and Free Time for Containerized Imports and Exports Moving through Selected United States 

Ports. The report was based on feedback from the port congestion forums, and on an analysis of 

selected vessel operating common carrier (VOCC) tariffs, port rules, and other sources, and concluded 

that demurrage charges are higher for importers than exporters, charges are higher for demurrage than 

detention, and the charges are similar across all ports except for New York-New Jersey, where they are 

much higher. The report also determined that VOCCs, rather than marine terminal operators (MTOs), 

tend to control these prices and policies. It noted, however, that direct comparisons between tariffs are 

difficult due to inconsistent terminology and application of charges bearing similar names. Continuing 

with the release of information gathered from the port forums, on June 24, 2015, the Commission 

unanimously voted to release a staff report entitled U.S. Port Congestion & Related International Supply 

Chain Issues: Causes, Consequences, & Challenges. The report is a synopsis of the stakeholder viewpoints 

49 The forums were held at the ports of Baltimore, Los Angeles-Long Beach, Charleston, and New Orleans
"

respectively. On September 15th, in San Pedro, CA, discussing West Coast port congestion; on October 1st , in
"

Baltimore, MD, discussing Mid-Atlantic and Northeast port congestion; on October 30th in Charleston, SC, 

discussing South Atlantic port congestion; and on November 3rd, in New Orleans, LA, discussing Gulf Coast port 

congestion.
" 50 Federal Maritime Commission, 2014 Public Port Forums (2014),
"

http://www.fmc.gov/news/2014portforums.aspx.
" 51 Federal Maritime Commission, Congestion at U.S. Ports is Commissioner Priority for 2015, Jan. 15, 2015. 

http://www.fmc.gov/congestion-priority-2015/?pg=4.
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expressed across the forums held by the Commission. The FMC urged the public, and those with an 

interest in port congestion, to submit their comments regarding this report. 

Port congestion during 2014 was due to a variety of factors, some recurring problems, and some new. 

The increasing prevalence of vessel-sharing alliances, slowdowns and temporary lockouts due to labormanagement disputes, as well as, shortages of equipment and reduced truck availability, all contributed 

to the problems. These problems are interconnected, and often have a cascading effect on one another. 

Increasing numbers of megaships, a phenomenon becoming more common with the formation of 

container shipping alliances, means ports must handle larger numbers of containers arriving at once, 

adding to congestion.52 This will create a cascading effect where ships of up to 14,000 TEUS will be 

pushed into the U.S. trade, potentially straining port facilities’ ability to efficiently handle cargo. 

Furthermore, the number and complexity of container moves within a port increases when a single ship 

carries containers for multiple lines.53 In the port of Los Angeles, for example, a large ship can generate 

5,000 container moves during a single call over two and a half days, with up to 8,000 moves total.54 The 

situation is further compounded when one box moves several times. With the larger ships, some 

alliances have gone away from block stowage. This has created a situation where ports have cited 

containers being moved, not their usual one to three times, but four to eight times.55 

Equipment shortages also played a role in port congestion. Chassis availability for container transport 

has been a particular problem at Los Angeles-Long Beach and New York-New Jersey.56 Increases in 

shipping volumes contributed to this problem, as did the relatively recent decision of most carriers to 

divest themselves of chassis ownership. Trucking interests have expressed concern about a provision in 

the ILWU-PMA agreement requiring safety inspections of certain chassis by ILWU workers, which some 

believe could cause significant delays.57 

Truck and driver shortages have also been a continuing problem. Trucking industry representatives 

reported long wait times in ports as a primary issue.58 Because drayage truck drivers are usually paid by 

52 Id. 53 Id.
& 54 Bill Mongelluzzo, Chassis Shortage could lead to Gridlock at LA-LB, Terminals Warn,” THE JOURNAL OF COMMERCE,
"

Sep. 12, 2014, http://www.joc.com/port-news/us-ports/port-los-angeles/chassis-shortage-could-lead-gridlock-lalb-terminals-warn_20140912.html.
' 55 Chris Dupin, Container shipping needs better information exchange says Slangerup, AMERICAN SHIPPER, Jan. 29, 

2015, 

http://www.americanshipper.com/Main/News/Container_shipping_needs_better_information_exchan_59336.asp
"

x. 

56 Bill Mongelluzzo, (Sep. 12, 2014). 

57 Bill Mongelluzzo, “ILWU Chassis-Inspection Provision Already Causing Delays,” THE JOURNAL OF COMMERCE, May 26,
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2015, http://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouse-union/ilwuchassis-inspection-provision-already-causing-truck-delays_20150526.html.
" 58 Joseph Bonney, Virginia Port Publishes Weekly Truck Turn Times, THE JOURNAL OF COMMERCE, Feb. 11, 2015, 

http://www.joc.com/port-news/us-ports/port-virginia/virginia-port-publishes-weekly-truck-turntimes_20150211.html. 

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the mile, long wait times decrease their profits because they cannot make as many trips per day.59 This 

can, in turn, threaten to decrease the pool of drivers if the industry is not sufficiently profitable. In 

addition, trucking interests have been urging ports to publish accurate truck turn times and container 

dwell times.60,61 Few ports regularly measure and publish this information, and trucking interests claim 

that ports often measure only “gate-to-gate” times, which does not account for time spent waiting 

outside a gate.62 Some ports have begun testing and implementing appointment systems for cargo pickups that could ease congestion, but some truckers oppose these systems.63 Trucking companies have 

reported increased difficulty in recruiting and retaining drivers in the drayage trade.64 

CARGO DIVERSION AS A RESULT OF CONGESTION 

When gathering comments for the Commission Notice of Inquiry for the original 2012 containerized 

cargo diversion study, the Commission received a number of comments that cited Prince Rupert’s 

geographic location as a reason for preferring that port to the ports on the U.S. West Coast. Those same 

commenters stated a preference for using Prince Rupert due to the, “ability to shift cargo to Prince 

Rupert should there be labor unrest or instability at U.S. [W]est [C]oast ports.”65 This proved to be 

particularly prophetic during the severe port congestion experienced in the U.S. West Coast ports during 

this past year. 

Congestion has prompted many shippers to seek alternate routes for future cargo, leading to cargo not 

only being diverted to the U.S. East Coast, but to Canadian and Mexican ports as mentioned above.66 

Port of Los Angeles Director Gene Seroka said that the Ports of Los Angeles and Long Beach have made 

progress in eliminating backlogs, getting services back on schedule, and improving cargo flow. Many 

shippers, however, fear future labor-management disruptions, prompting them to move their cargo to 

other ports as they are willing to pay more for greater predictability, according to Mark Hirzel, President 

of the Los Angeles Customs Brokers and Freight Forwarders Association.67 Furthermore, the Panama 

Canal expansion, scheduled to open in 2016, may lead to more cargo bypassing West Coast ports in 

59 Joseph Bonney, US Ports Move Toward Truck Appointment Model, THE JOURNAL OF COMMERCE, Apr. 27, 2015, 

http://www.joc.com/port-news/us-ports/port-new-york-and-new-jersey/us-ports-move-toward-truckappointment-model_20150427.html.
" 60 Joseph Bonney, Virginia Port Publishes Weekly Truck Turn Times, THE JOURNAL OF COMMERCE, Feb. 11, 2015, 

http://www.joc.com/port-news/us-ports/port-virginia/virginia-port-publishes-weekly-truck-turntimes_20150211.html. 61 The dwell time for a container is the average time a container remains stacked on the terminal. A truck turn time 

is defined as the amount of time it takes for the trucker is in the terminal from gate-in to gate-out. This does not 

include the time spent waiting to get into the terminal. 

62 Id.
& 63 Id. For example, the Association of Bi-State Motor Carriers opposes appointment systems until truckers can be
"

assured that turn times will be short and reliable.
" 64 Id. 65 Federal Maritime Commission, “Study of U.S. Inland Containerized Cargo Moving Through Canadian and Mexican
"

Seaports.” July 2012, 4-5. 66 Andrew Edwards, Port News: ILWU Members Ratify 5-Year Labor Contract, PRESS-TELEGRAM, May 22, 2015, 

http://www.presstelegram.com/business/20150522/port-news-ilwu-members-ratify-5-year-labor-contract. 67 Id. 

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favor of an all-water route to the East Coast, as the canal will be able to accommodate up to 13,000 TEU 

ships.68 The canal currently handles 4,500 TEU ships. 

For the first time in recent decades, East Coast ports handled more laden containers than West Coast 

ports in the first three months of 2015.69 Year-over-year laden container traffic increased by 9% on the 

East Coast, decreased by 12% on the West Coast, and increased by 8% on the Gulf Coast.70 Atlantic 

ports’ market share in the first quarter was about 48%, while West Coast ports’ share dropped to 

around 44%, and the Gulf Coast increased market share to about 8.3%.71 This trend has continued well 

into the first half of this year. East Coast ports grew their U.S. import market share to 44% between 

January and April 2015, while West Coast ports share of the import market shrank to 49% as compared 

to 54% for the same period in 2014. 72 

During the most recent wave of port congestion on the U.S. West Coast, Canadian ports also 

experienced a wave of cargo diverting to its ports specifically related to this congestion. In October 

2014, the manager of marketing for the Prince Rupert Port Authority, Brian Friesen, stated that, “[their] 

carriers have advised [Prince Rupert] and CN and Maher Terminals to expect an increase in volume in 

the [coming] weeks.”73 Friesen also noted that CN was prepared to add capacity to carry an additional 

2,600 TEUS to their then current ability to carry 5,850 TEUS from Prince Rupert to the U.S. Midwest per 

week.74 

In a recent survey, The Journal of Commerce interviewed 138 shippers. Sixty-five percent of those 

surveyed said they planned to ship less cargo through the U.S. West Coast.75 (By comparison, in a similar 

survey conducted in December 2014, 66% said they would reroute cargo away from the U.S. West Coast, 

indicating that shipper opinion had not changed over the past year.76) Of those who reported they 

would reroute cargo away from the West Coast, 22.7% said they would reroute 10-30% of their cargo, 

while 18.3% said they would reroute 5-10% of their cargo.77 The survey also asked what alternative port 

would be used. The majority said they would reroute to other U.S. ports, primarily the East Coast. 

68 Bill Mongelluzzo, West Coast Volume down Months after Slowdowns Ended, THE JOURNAL OF COMMERCE, Jun. 2, 

2015, http://www.joc.com/port-news/port-productivity/west-coast-volume-down-months-after-slowdownsended_20150602.html.
" 69 JOC Staff, US East Coast Laden Container Outpaces West Coast Traffic, THE JOURNAL OF COMMERCE, Jun. 4, 2015, 

http://www.joc.com/port-news/us-ports/us-east-coast-laden-container-outfaces-west-coast-traffic-firsttime_20150604.html. 70 Id.
& 71 Id. These numbers equal more than 100% because of the way the numbers were rounded in the article cited.
" 72 Record Savannah Volume suggests diversions becoming permanent, THE JOURNAL OF COMMERCE, May 18, 2015, 

http://www.joc.com/port-news/us-ports/port-savannah/record-savannah-volume-suggests-diversions-becomingpermanent_20150518.html.
" 73 Peter Tirschwell, Prince Rupert expects wave of diversion cargo from LA-LB congestion, THE JOURNAL OF COMMERCE, 

Oct. 23, 2014, http://www.joc.com/port-news/international-ports/port-prince-rupert/prince-rupert-expects-wavediversion-cargo-la-lb-congestion_20141023.html. 74 Id. 75 Mark Szakonyi, 65 percent of shippers in JOC survey say they’ll divert from West Coast, THE JOURNAL OF COMMERCE, 

Feb. 25, 2015, http://www.joc.com/maritime-news/trade-lanes/65-percent-shippers-surveyed-saythey%E2%80%99ll-divert-west-coast_20150225.html. 76 Id. 77 Id. 

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However, 14.7% responded that they would ship to either Vancouver or Prince Rupert, and less than 1% 

said they would use a Mexican port.78,79 This trend continued into 2015, but there has been some 

evidence that this trend is beginning to reverse.80 

Industry analysts are already stating that permanently diverting to the U.S. East Coast ports may 

ultimately turn out not to be a sound choice for some shippers. Maritime analysts with SeaIntel say that 

during the period of heavy congestion diverting cargo to the U.S. East Coast benefitted shippers. 

However, with the situation stabilizing and returning to normal, West Coast reliability is also predicted 

to return to normal.81 According to SeaIntel, under “normal conditions,” U.S. West Coast on-time 

reliability was higher, at 84%, compared to 75.6% on the U.S. East Coast. 

PART THREE: CONCLUSION 

Now in the third year since the issuance of the original containerized cargo diversion study report, we 

have seen that shippers are not going to stop diverting cargo through Canadian ports, and that Mexican 

ports continue to present another option for those individual shippers looking for alternative routes. As 

a result of the congestion seen on the U.S. West Coast, 2014 was the most active year for cargo 

diversion. It remains to be seen whether this trend will continue in the future, though there are several 

indicators that 2014 is not an anomaly: several ocean container shipping lines have submitted orders for 

megaships capable of carrying 19,000 TEUS or more, and the enlarged Panama Canal is scheduled to 

open in 2016. Though U.S. ports cannot handle the largest of the megaships, there is a cascading effect 

of the “smaller” 4,000 to 9,000 TEU ships being pushed into service on the U.S. trade routes. 

In the face of these challenges, it is crucial that we, as a country, continue to ensure the viability of our 

nation’s ports. The primary function of the Federal Maritime Commission is, and will continue to be, the 

protection of those engaged in the United States’ foreign waterborne commerce while fostering a fair, 

efficient, and reliable international ocean transportation system. True to our mandate, the Commission 

will continue to monitor cargo diverting from U.S. ports to our Canadian and Mexican neighbors. 

78 Id. 

79 The breakdown of the percentage of survey respondents that reported that they would use alternative ports is
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as follows: the U.S. Northeast Ports 16.1%, U.S. Southeast Ports 22.7%, U.S. Gulf Coast Ports 16.1%.
" 80 Eric Kulish, L.A. Port Cargo Volumes Down 6.1 percent in April, AMERICAN SHIPPER, (May 18 2015). 81 Have US West Coast defectors jumped too soon?, LLOYD’S LIST, (Jun. 2, 2015) at 4-5. 

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