The global marine transportation system is in the middle of a transition period as it continues to adjust to the boom in China trade with improvements that will eventually require shippers to pay higher transportation prices, according to the head of the Transpacific Stabilization Agreement.

TSA Executive Director Albert Pierce said higher prices are necessary to guarantee service reliability by carriers and terminal operators that are investing huge amounts of capital to build more container ships, ports and terminals, as well as to upgrade technology and improve visibility in the marine supply chain.

He told the Containerisation Liner Shipping & China Conference in Ningbo, China, that these investments are putting the industry "within reach, on the North America side of the Pacific, of doubling throughput at our gateways."

He said the boom in China cargo is forcing long-overdue improvements across the entire supply-chain infrastructure, but he warned that a number of constraints on the inland leg of the supply chain continue to cloud the future. "Inland rail investment is not keeping pace with the other pieces of the network," he said, even though intermodal traffic, which is growing at 10-15 percent annually, is the fastest-growing segment of the rail business.

Trucking has a different set of problems, he said, including driver
shortages, high fuel prices and limits to hours of service.

Compounding the problems of inland transport is the huge backlog of cargo-related rail projects, highway connectors and other infrastructure projects that are urgently needed but have no clear funding source, said Pierce.

The TSA chief said the China boom means that it will take the industry two to four more years to catch up on its infrastructure development, including new ports in Mexico and Canada as well as improvements at existing ports and terminals.

Although Pacific Northwest ports have picked up some of increased tonnage and East Coast ports have captured another large segment, Pierce said these alternatives cannot continue to absorb the excess because of their own infrastructure constraints.

In order to absorb the continuing growth of the China trade, shippers will have to pay higher prices so that carriers, port and terminals, railroads and trucking companies can continue to make the necessary infrastructure investments, Pierce said.

By Peter T. Leach