On Friday April 11th, the Federal Maritime Commission chose to not block the East Coast Gateway Port Terminal Agreement, an agreement between the Ports of Virginia and Savannah, Georgia to increase cooperation. This agreement allows the two ports to share systems and equipment; exchange information regarding cargo handling; draft joint agreements with carriers, shippers, and other terminal operators; and sync marketing materials. However, the ports will not be empowered to jointly manage terminal rates and charges. This agreement is in response to consolidation among global shipping lines, namely that by the start of April three alliances between major ocean carriers controlled 90% of shipments on “major global trade routes.” John Reinhart, Virginia Ports Director, clarifies that the goal of this agreement is to position these two ports as the “East Coast’s primary cargo gateways,” and that it would make the ports more effective at managing the large cargo ships that are increasingly in use due to the expansion of the Panama Canal. This has shaken up the shipping industry because the mega-ships require fewer port calls, resulting in fewer ports seeing large container discharges and therefore intensified competition among the limited ports that can receive them.
Currently, the Port Authority of New York and New Jersey is the largest East Coast container port in the U.S., managing over 3.4 million twenty-foot equivalent units (TEUs) in 2016, which represents almost 35% of East Coast container traffic. Comparatively, in 2016, the Port of Savannah handled 1.5 million twenty-foot equivalent units (TEUs) of cargo, while the Port of Virginia handled 1.3 million TEUs; collectively, this accounts for almost a quarter of east coast cargo traffic. The respective port operators for Virginia and Savannah, Lynch and Reinhart, note that while the agreement is currently only limited to two ports, future agreements may expand the pool of collaboration, with potential partnerships with the Port of New York and New Jersey, or the South Carolina Ports Authority. Port authorities and terminal operators at the American Association of Port Authorities Spring Conference also discussed future port alliances in closed sessions, based on the precedent set by this agreement.
Further Reading and Sources:
- Georgia, Virginia Ports Seek Approval of Partner Agreement – US News and World Report
- Regulators approve Virginia-Georgia ports alliance – JOC
- Federal Regulators Approve Georgia-Virginia Ports Agreement – WSJ
- Georgia, Virginia ports plan cooperation to gain edge – JOC
- Port Authorities of Georgia and Virginia File East Coast Gateway Terminal Agreement – Port of Virginia
- S. Ports Forge Alliances to Keep Their Spots on Trade Map – WSJ