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U.S. West Coast Ports Could Lose Up to 45% of Intermodal Imports to B.C. Rivals, Study Warns

Posted October 02, 2020

A new study commissioned by the Pacific Maritime Association warns that high terminal charges, U.S. rail costs and other competitive factors could cause U.S. West Coast ports to lose up to 45% of intermodal import business to rival ports in British Columbia by 2030.
Intermodal Cargo w/ Map Featuring Canadian Ports in Background

“The U.S. West Coast ports continue to be the largest North American gateway for Asian imports, but that lead is being eroded not just by U.S. ports in the Gulf and East Coasts, but also by the two major ports in British Columbia,” said PMA CEO Jim McKenna.

The study identifies the Chicago and Memphis markets as the most susceptible to Canadian competition because of their direct connection to the ports of Vancouver and Prince Rupert by the two primary Canadian railroads.

For intact intermodal cargo, the report found that the two B.C. ports have significant route cost advantages as high as $600 per container over U.S. West Coast ports. This results from appreciably lower rail rates charged by the Canadian railroads, as well as lower terminal costs to move the containers from ships to trains. The Canadian ports’ cost advantage is even greater due to surcharges imposed at U.S. gateways, the report notes.

Underpinning the cost advantages of Vancouver and Prince Rupert were factors such as:

  • Lower costs for locomotive fuel, ownership/leasing, and maintenance/repair for trains operated by both Canadian Pacific and Canadian National railways.
  • Lower unit costs for marine terminal labor and lower terminal lease rates.
  • Avoidance of payment of surcharges such as the Harbor Maintenance Tax and/or the Alameda Corridor Transportation Authority transit fee.

In view of this notable differential, ongoing investments in Vancouver and Prince Rupert terminals could translate into loss of markets for U.S. West Coast ports, the report suggests. “Of the roughly 1.2 million TEUs/year of new capacity being added to these two terminals by or before 2023, at least 630,000 TEUs should be available for import flows.”

“This growing source of competition for valuable discretionary cargo is yet another wake-up call, especially for the Ports of LA, Long Beach, Seattle and Tacoma where most intermodal cargo is currently handled,” said McKenna.

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