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US Ports Forge Alliances to Keep Their Spots on Trade Map

Photo credit: The Wall Street Journal

U.S. ports are teaming up to survive the consolidation that has swept the shipping industry. Whether it’s sharing data as the Los Angeles and Long Beach, California, ports do or merging as Seattle and Tacoma, Washington have, port operators are recognizing it takes more investment and might to remain relevant in the new landscape.

Recent pressure comes as a result of a laundry list of shipping woes including a double-digit drop in freight rates and slow trade, all of which was exacerbated by the plight of Hanjin Shipping Co. and its subsequent bankruptcy filing in August.

From there, carriers scrambled to form alliances to future-proof their businesses. The resulting big three companies will dominate the industry, handling 90 percent of shipments. Together these behemoths are using equally outsized ships in an effort to save money.

These larger ships demand larger harbors and different equipment. And, in turn, they necessitate port operators to retrofit for them, a task that adds up to billions of dollars. Ports in Miami and South Carolina are digging deep. For those that can’t foot the bill alone, these new alliances allow them to gather the necessary resources.

The Wall Street Journal looks at how ports are responding and the ripple effect these consolidations may have across industries.