Posted on November 16, 2021 · Posted in Industrial / Flex, Retail

Politicians from Florida are talking-up the state’s ports as the solution to the worsening congestion threatening to snarl-up imports of seasonal merchandise beyond the selling window.

They are even flashing money to entice container carriers to change course for the Sunshine state.

Florida governor Ron DeSantis has issued stark warnings that children are in danger of going without Christmas presents, pointing to the rising number of ships sitting idle off the west coast waiting for berth space at the ports of Los Angeles and Long Beach.

The governor’s message is that Florida’s ports can save Christmas. He has declared the state’s ports “open, uncongested and ready to come to the rescue”, welcoming any vessel that arrives to discharge its load destined for people in Florida as well as beyond.

He is supported by the Florida Ports Council (FPC): President and CEO, Michael Rubin, said: “We have the opportunity to provide shipping lines and beneficial cargo owners a more efficient route that can get their product not only to the third-largest domestic market in the country, but also to other markets outside of Florida within two days.”

Jaxport, the port of Jacksonville, announced last month it would be offering incentives to any company that chooses to move its cargo through the port.

And two members of Congress from the state have tabled plans to free-up funds to incentivise container lines to turn their backs on the congested ports of southern California. Their plan would take $125m of unused money from the CARES Act, a $2.2 trillion stimulus bill introduced by the previous administration.

“Like Florida, several states in the Gulf and eastern seaboard have both the port capacity and the logistics capabilities to ensure goods reach our shelves in a timely and efficient manner,” said one, congressman Carlos Gimenez.

The Supply Chain Emergency Response Act the pair are pushing in Washington offers money to shipowners that shift their vessels from the west coast to a port on the eastern seaboard or US Gulf and would cover the toll costs of going through the Panama Canal. Applicants would have to submit documentation showing they have agreements to dock at a west coast and a Gulf or east coast port.

Chinese carriers would not be eligible for the grant – seen as a reflection of anger over Asian and other international carriers allegedly limiting the number of containers they make available to US exporters. Indeed, a month earlier, Mr Gimenez proposed legislation meant to discourage US ports and terminals from buying Chinese gantry cranes.

Houston, which dominates container imports through US Gulf ports, presumably won’t be clamouring aggressively for vessel diversions from California. A surge in container imports has slowed unloading of vessels there. And a rising number of import containers is stored at nearby rail depots due to lack of space at the port, and chassis supply has tightened.

In the first eight months of the year, US imports through Gulf ports were up 25.1%, year on year, and Houston has retained its share of the market, which stands at 69% of imports into the region.

However, the rhetoric from Florida is not very likely to sway many carriers to divert their ships to the east coast. One forwarder executive noted that re-routing a vessel involved more than berth space. A carrier would have to ensure there was enough labor to unload the vessel, enough chassis, trucks and rail capacity and the other elements of the supply chain to handle the traffic. Moreover, the revised routing may not fit with the needs of the cargo owners.

John McCown, founder of Blue Alpha Capital is one of several executives who questioned Florida’s move: “There are factual reasons supporting a shift of boxes eastward, but this is a silly grandstanding move by politicians that know nothing about shipping. First, while Panama Canal tolls can be $500,000 or more, they are a small part of the entire cost of repositioning large containerships from the west cpast tp the east. Second, we shouldn’t have an ad hoc subsidy programme aimed at an industry now operating at historic profit levels (the $28bn record industry profits for Q2 21 will be eclipsed by Q3 21, where my preliminary estimate is $44bn ). Third, this is a private sector decision that should be made by carriers in awareness of what their customers want, not by Florida politicians who want to use federal dollars to generate business for Florida ports.”

On the other hand, faced with the prospect of missed Christmas sales, an importer may find a diversion appealing.

 

Source: The Loadstar

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