“Smart infrastructure investment precedes, follows and facilitates growth,” he said.
Southeast Asia, through the Suez Canal, could become an emerging trade partner if the postponed increase of Section 301 tariffs on $200 billion of Chinese goods is imposed on March 2, he said.
“It has an opportunity to shift the manufacturing base south to Southeast Asia and maybe provide an impetus for accelerated growth on other trade sites,” Hurwitz said. “From a planning perspective if enacted it won’t be good. The longer these tariffs last the worse it will be. From a long-term perspective with regards with things we can do in our planning, it opens another opportunity for another trade lane to grow.”
A shift to Southeast Asia and India has already had the opportunity to begin since China’s banning of waste paper imports in 2017. That year China represented 68 percent of the United States’ shipments, nearly all of which was exported through the West Coast, after a lot of waste paper transitioned to containerized trade in 2016 due to a drop in transpacific container rates, Hurwitz explained.
Since the ban, China’s volume has decreased by 45 percent from peak levels, but “India has really taken off,” Hurwitz said.
The cost effects of IMO 2020 — the International Maritime Organization’s decision to lower the maximum amount of sulphur content in marine bunker fuel — on shippers could also shift cargo back to West Coast ports, at least temporarily, Hurwitz said.
Shippers will be forced to introduce bunker accommodation factors to account for the cost, which could be $450 per FEU on head haul, he said. In 2020 to 2021, that price increase could shift 1.2 million TEUs in discretionary cargo to West Coast ports.
But as demand for low-sulphur fuel increases, the costs are expected to decrease over the long term, Hurwitz said, which could allow the East Coast to regain some of the market share.
“On the East and Gulf coast ports what we should be doing is thinking about how to use this reprieve over the short term to continue to make long-term infrastructure investments to regain market share,” Hurwitz said. “Recognizing that if West Coast ports, rail and trucks are able to adjust accordingly to the surge we’re able to raise the bar for competition.”