American Seaports’ Importance to Global Trade

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Table of Contents

Introduction
Discussion
US Trade Traffic and Infrastructure
Trends and forecasts in International shipping
Conclusion
Works cited

Introduction

A seaport refers to a facility that has been constructed to receive ships, as well as to transfer cargo. In order to load or unload ships, seaports are usually equipped with cargo-handling equipment. Within the seaport, there are areas referred to as “dry ports” where containers and bulk cargo are placed, and in most cases the dry port is connected to a given seaport by either the rail or the road. Some seaports do not experience the freezing of water during winter; hence they are referred to as “warm water ports’.

These ports are very important when it comes to ocean trade because they can be used the whole year-round. The USA has some of the best seaports in the world, which are considered to be very important to the nation’s economy. Since the USA has the most powerful economy in the world, the nation plays a very vital role in global ocean trade (Dockray, Martin. 2004).The seaports serve as facilities through which commodities reach or leave the country(exports and imports).

The US seaports are very important in facilitating the arrival of imports from other countries, and the leaving of commodities from the US to other countries (exports). The seaport industry however is facing some growth and economic problems. The efforts to address these problems have promoted the proposal of administration policies in relation to the US seaport industry. The US seaports play a very critical role in promoting global trade and in the economic development of the nation. In this paper, the importance of the seaports in global trade and US economic growth will be discussed. The port’s capacity and efficiency will also be looked at.

Discussion

US seaports importance in global trade and US Economic growth

The seaports act as facilities that have stimulated great growth of the ocean trade. The US is one of the world’s nations that lead in exports and imports.It has a very huge population which makes it a good market for various commodities and services.Other nations have taken advantage of the nation’s large market, which has encouraged business between them and the US(Kendall, Lane and Buckley, James.2001). Large volumes of goods arrive and leave the US seaports to and from various destinations.

This has created so many business opportunities through the ocean trade. Due to this, the seaports have played and continue to play a very vital role in the growth of the global trade through water transportation. The growth of industries in various nations has led to the production of goods in large numbers in order to satisfy the ever increasing market demands. These goods are easily supplied to the people through effective and fast means of transport. The US seaports facilitate the supply of commodities from other nations to the US large market. In addition, commodities from the US industries and companies can be supplied to the foreign markets. This has led to great growth of the global trade.

There have been increased investments in the global trade in order to match the growth of the global maritime industry. The maritime industry generates a lot of income. This has made the industry to witness so many investments from both the local and foreign investors. The need to exploit the business opportunities that have been presented by the industry’s growth has increased private and government investments.

Through the investments, companies have managed to generate huge amounts of revenue which are then channeled back to the maritime industry business activities (Stopford, Martin.1997) many nations have had their economic growth boosted by the ocean trade between them and the USA. The capital availability due to increased revenue from the trade has no doubt encouraged so many investments in the industry.The future predictions indicate that the maritime industry will continue growing such that the US seaports will handle three times the cargo volume its handling now by 2020.With the trend indicating positive growth of the industry, many nations and private companies have embarked on plans to invest in the seaport industry. This will lead to continued growth of the maritime global trade.

In the United States, the global trade contributes greatly to the economic growth through the foreign business supported by the seaports. The US is one of the leading world’s nations when it comes to the value of exports and imports. The US exports have continued to constitute a large proportion of the GDP (Gross Domestic Product) since its domestic and foreign commerce sectors depend on the seaports.

For instance, a very big percentage of the US trade is handled through the ports. With its large number of seaports, the US handles large volumes of cargo at any given time. According to a study conducted on the US seaports, the US waterways transportation system large number of ports has which can handle large volumes of cargo each year. Since then, the soaring foreign trade has continued to increase the volume of cargo that the US ports handle every year. Some of the US seaports rank as some of the best in the world when it comes to handling large weights (cargo). For instance, the South Louisiana port in 2005 handled most freight in the United States.

In the same year, around 25 US ports were able to handle about two-thirds of total goods (foreign and domestic goods) moved by water. Other ports included Los Angeles (LA), Valdez (AK), News Orleans (LA), New York , Norfolk Harbor, Philadelphia (PA), and Freeport (TX). The ports ability to handle large capacity of cargo has resulted to tremendous economic growth in the USA, due to the overseas trade commodities that go through the ports (U.S. Army Corps of Engineers.2005) In 2006, the US seaports economic gains from the international waterborne commerce were estimated to amount to $207.4 billion. The economic outputs which were generated by the port-sector businesses contributed an estimated $1, 976.4 billion.

The revenue that is generated from the US seaports has promoted the expansion of ports in other nations, a measure that is aimed at offering stiff competition to the US maritime industry. In any business enterprise, business activities are usually directed towards maximum gains. In the past, the US ports have proved that the industry can generate huge profits to those who are willing to invest in it. This is a lesson that has been learned by other nations.

In their efforts to compete with the US in this industry, new ports are being constructed while the already established ports are being expanded and installed with new technology. Through the US seaports, stiff competition in the industry has been triggered. The competition is very instrumental in the global trade growth because the ports are now expanding their facilities, and are increasing the efficiency of the ports.

Through the revenue generated in the seaports, the construction of infrastructure that supports the functions of the seaports has been made easy. The huge amounts of profits that are reaped from the industry are used to provide capital that is required to put up new infrastructure or to improve the old one. The establishment of infrastructure facilitates the functions of the seaports efficiently. The improvement of the infrastructure has encouraged the global trade through fast and effective means of transport for the trade commodities. Poor infrastructure undermines the growth of this trade. The revenue generated from the ports apart from encouraging the global trade provides the US federal, state, and local governments with huge amounts of money through taxes (Wilson, John.2007).

The funds are then utilized to build new public facilities and infrastructure. The payments are usually made to the governments in form of taxes, making it possible for the seaports business to provide funds for the nation’s development projects. For instance, the port-sector businesses contributed an estimated $102 billion to the local, the federal, and the state governments. These funds were then channeled towards the development projects in the nation. Through the global trade, the USA has managed to put up some of the world’s best public facilities and infrastructure.

Another very important role that the sea ports play is the creation of job opportunities to a very large number of people (Dockray, Martin. 2004). The job opportunities have increased the labor force which has in turn increased productivity in the global trade. Many nations that are involved in trade with the US through the seaports have had to employ a large number of people to facilitate the trade activities.

Those who are employed are equipped with good skills, a situation that has increased the productivity and efficiency in the global trade. These employees are hired to work as longshoremen, steamship agents, ship pilots, tug and towboat operators, chandlers, terminal operators, warehousemen, marine constructors and ship repair technicians. In addition, other seaport-related trucking and railroad industries in the US and in the other nations that trade with it provide jobs to the citizens. The need to provide entertainment, housing, food, transportation, and health services to those employed in the ports opens up new job opportunities for the service providers.

For instance, the US sea ports provided employment to about 507,448 people in 2006 In the US, the local, state, and federal agencies who supported the education and municipal services functions within the seaports provided indirect jobs to about 306,289 people. Due to the direct port-sector job opportunities, an extra 630,913 jobs were created. The port-sector jobs are considered to pay wages which are above average. By empowering the people financially, the efficiency and productivity of the US and other nations’ ports is boosted. This has encouraged positive growth of the global trade.

The Capacity and the Efficiency of US seaports in Global Trade

The US seaports capacity has been increasing with time, a situation that can be attributed to the soaring foreign trade in the world. The cargo volume that the US ports load and unload in its seaports keeps on increasing. The large number of seaports in the US as well as the ports ability to handle large volumes of cargo has encouraged the transportation of huge volumes of imports and exports to and from the ports. This has been one of the contributing factors to the global trade growth…

The volume of cargo the ports receive everyday has encouraged the development of plans to expand the port’s facilities in order to accommodate the huge volumes of cargo. This volume is expected to increase in future. The US west coast ports are experiencing huge cargo volumes, as well as the eastern and the southern ports. Though the ports have the ability to handle large volumes of cargo, the US seaports have to some extent been facing capacity-related problems. This is because the growth of the trade has had more ships being loaded and unloaded in the ports (Wilson, John.2007).

In order to ensure that the commercial demands of the ports are met, the ports have been encouraged to develop the capacity to handle the ever increasing cargo volumes. This is being done through the integration of modern technological advancement in the ports and logistic solutions. The measures are aimed at providing a solution to the already experienced cargo congestion in the ports, to prevent future congestion, and to increase the efficiency of the ports.

This has been very vital in minimizing the transport problems that the industry may experience that may affect severely the global trade. Furthermore, renovating the infrastructure facilitates smooth running of the trade activities between the US and the other nation’s seaports. Other countries in their efforts to increase their ports capacity and efficiency to match the trade demands have put into place plans to establish ports that will offer stiff competition to the US seaports trade. The future competition of the US seaports is expected to come from Mexico and Canada, where the ports are being installed with modern technology and good infrastructure.

Some of the US seaports receive cargo volumes that are congesting the ports. The container trade in the seaports contributes greatly to the global trade. Based on the freight handled by each port, the US ports handle different cargo volumes depending on their ability to do so. The US Los Angeles port had earlier been listed as one of the congested ports. The huge volumes of cargo that are handled in the ports have created job opportunities to very many people (Branch, Edward.2006)… For instance, since the ports handle large volumes of cargo, around 8,397,301 Americans have been employed to handle the port’s duties (retailers, wholesalers, manufacturers, logistic companies and distributors).

The efforts to expand the US seaports has initiated the expansion of the seaports and the related infrastrucuture.For instance, the Panama canal expansion project was aimed at making the canal accessible by bigger ships and allowing more traffic. This would benefit the US seaports in relation to the global trade. The project which was to cost $5.2 billion was expected to have a new traffic lane built along the Panama Canal by constructing new set of locks. This would then double the capacity or the volume of cargo that the port could handle. In addition, the expansion would allow more traffic and wider ships. After its completion the Panama Canal was expected to handle more than 600mn Panama Canal tons.

The US seaport capacity problem has encouraged the expansion of other ports outside the US. For instance, the Vancouver port in its efforts to have the upgrading program service new and larger ships, the port management purchased ZPMC’s crane for the Vantern terminal. This was the sixth ZPMC crane to be installed at the Vanterm container terminal, and the installation at the terminal aimed at increasing the port’s capacity to 850,000 TEUS.

The feature was able to integrate twin lifts and had a total life capacity of 65 tons. This would make it possible for the port to have two containers lifted at any given time. This would then increase the efficiency of the port. The expansion of the port was very important in increasing the efficiency of the US seaports. Some of the extra cargo volume that would have been directed to the US seaports in excess was then diverted to such upgraded ports. This reduced congestion of cargo in the ports, which then impacted positively on the global trade.

The US ports cargo volumes keep on increasing since the seaports’ management have implemented development projects that will ensure that they keep in pace with the huge cargo volumes. The surging container volumes have continued to benefit the US seaports and the growth of the global trade. The ability to handle large cargo volumes and the increased efficiency of the seaports has generated robust earnings for the ship owners, the operators, and the logistic companies.

The growing ocean trade has been encouraged by the US companies trend to move towards overseas production. Though the seaports have in the past been experiencing operation problems in handling of cargo, the efforts to increase efficiency are being put in place. For instance, the US ports management has been working very hard to balance the evolving political and regulatory hurdles that relate to the ports’ security and environment.

The US capacity to handle large volume of cargo, coupled with the ports efficiency has stimulated economic growth of other nations through the growth of global trade. Other nations’ positive economic trends have supported the growth of ocean trade. The US trade with countries such as China, Germany, and Japan has increased the volume of cargo that the US seaports handle. The growth of trade has impacted positively on the US seaports, and has increased the capacity of the ports and improved their efficiency. The need to make changes that will go hand in hand with the economic growth has led to the expansion of US seaports

Challenges Facing the US seaports

Though the US seaports have in the past managed to handle large volumes of cargo, the ports/shipping terminals are currently finding it very difficult to handle the large container ships that come to the ports/terminals. The ports’ lack of adequate ability to handle the ever increasing cargo volume has undermined their efficiency (Bookman ,Charles.1996) Some of the factors that have been attributed to low efficiency in some US seaports include; slow port development, high costs of running the ports, budget cutbacks by the government, and lack of modern technology in the waterway management infrastructure.

The ports’ efficiency has also been undermined by the shallowness of the seaports. For example, compared to Netherlands’ most sophisticated seaport (Rotterdam) which is 50 feet deep, the US seaports are very shallow. This coupled with the congestion in the seaports lowers the efficiency of the ports. This has affected some US seaports efficient, making them less efficient that those in Europe. The low efficiency of the ports has threatened the US vital role in global trade because other nations are putting into place plans to establish new ports that can compete with the US seaports in future. For instance, Mexico and Canada seaports are offering stiff competition to those of US. This would make the US seaports lose the critical transportation routes that have encouraged the growth of global trade.

US Trade Traffic and Infrastructure

The US seaports have faced the unprecedented challenge of competing with the foreign ports. The US maritime industry has in the recent past experienced a critical shortage of funds which should be provided by the federal government, while the cargo volumes that the seaports have been handling have resulted to the congestion of the ports (Branch, Edward.2006) Some of the importers have temporarily diverted their cargo due to the seaport congestion and some shippers have turned to air freight program to transport their goods as an alternative to avoid the congested ports. The US seaports trade traffic has had some positive impacts on global trade and the economic growth of the nation.

Some benefits of the US trade traffic in the seaports include, business profits, creation of employment opportunities, and tax revenue to both the state and local governments. The trade traffic on the other hand has increased the congestion of cargo in the ports, has caused pollution, and has led to the wear and tear of infrastructure. The seaports trade traffic has been affected by the US trade patterns. For instance, the increase in imports from Asia between 1970 and 2002 increased greatly the flow of imports through the seaports.

Trends and forecasts in International shipping

It has been predicted that the US seaports will experience increased demand for shipping services. In order to satisfy this demand in future, the ports have been encouraged to expand their facilities. In future, the U.S. seaports are expected to face stiff competition from other foreign ports. For instance, the Mexican and Canadian ports are expected to compete with the US seaports greatly in future, due to the development plans that the ports have adopted with the aim of competing with the US maritime industry. The international shipping industry has been predicted to have the movement of freight by the sea triple by 2020.

The rising shipping costs at the seaports have put the US ports at a competitive disadvantage with other foreign ports. For instance, the introduction of the US Seaports security rules and regulations has increased the cost of running the ports. It has been recommended that for the ports to compete with other foreign ports there is need to maintain and expand the navigation channels. The ports will have to adopt new and modern technology in order to increase the efficiency of the ports in future, since the economic growth in Asian countries is expected to increase the imports that will go through the seaports.

In addition, increased efficiency will increase the ports capacity to handle the ever increasing cargo volumes faster. The seaports require physical expansion in order to increase their capacity. For this to happen, the ports will need to invest a lot of funds in the expansion programs. Instead of putting the burden of the funds on the local taxpayer’s shoulders, the ports will no doubt require outside investment by permitting the private investors to participate in the ports’ operations (Burnson, Patrick.2007)

Conclusion

The growth of global trade highly depends on the international trade which requires various nations to sell or buy commodities from each other. The global maritime industry provides a means through which large volumes of goods can be transported from one destination to another. The US seaports have played a very important role in promoting global trade. However, the seaports experience some problems that are related to the capacity and efficiency of the ports. In order to address these problems, measures are being put into place to ensure that the ports handle the appropriate cargo volume in an efficient manner.

Works cited

Bookman, Charles. US seaports: At the crossroads of the global economy.Issues in Science and Technology: National Academy of Sciences Publishers. 1996.

Branch, Edward. Elements of Shipping. Routledge Publishers. 2006.

Burnson, Patrick. U.S. Seaports Need More Outside Investment. 2007. Web.

Dockray, Martin. Cases and Materials on the Carriage of Goods by Sea. Routledge Cavendish Publishers. 2004.

Fitch Special Report – US seaports: Challenges and opportunities, 2006

Kendall, Lane and Buckley, James. The Business of Shipping. Cornell Maritime Press. 2001.

New Study Details Economic Benefits of US seaports. American Association of Port Authorities. Web.

Sowinski, Lara. A Turning Tide For U.S. Seaports. World Trade Magazine. 2004. Web.

Stopford, Martin. Maritime Economics Routledge Publishers. 1997.

U.S. Army Corps of Engineers. Waterborne Commerce of the United States 2003, Part 5, National Summaries.New Orleans, LA: 2005.

Wilson, John.Carriage of Goods by Sea. Longman Publishers. 2007.

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