The Current Developments in the Container Shipping Industry and Port Authority Strategies in the Context of the North American West Coast

This thesis has attempted to answer the following research question: “Which of the strategies described in literature on port management are the port authorities on the West Coast of North America adopting in order to react to the current developments in the container shipping industry?” From the literature that has been reviewed throughout this thesis, it can be concluded that the four strategies that container shipping lines are employing in their struggle to remain profitable, namely increasing vessel sizes, horizontal cooperation, slow steaming, and vertical integration, have a substantial impact on port authorities. As shipping lines gain more bargaining power through horizontal cooperation and vertical integration and are cutting costs where they can through increasing vessel sizes, slow steaming, and vertical integration, the competition among port authorities increases as their bargaining power deteriorates. This thesis merely discussed horizontal cooperation and vertical integration at the North American West Coast as slow steaming does not have an effect on the operations of port authorities and the West Coast port authorities are currently able to handle the size of the vessels that are being deployed on the transpacific route without any major adaptations. However, both horizontal cooperation and vertical integration have a strong presence on the North American West Coast as 91% of transpacific cargo is carried by alliances and the majority of West Coast terminals is dedicated to a specific shipping line. The available literature indicates that port authorities are implementing a reactive approach rather than a proactive one to cope with these external changes in their market environment. Scholars propose investment, cooperation, the provision of new services, and the reassessment of existing services as strategies to remain competitive in spite of these developments. These strategies have been adopted by port authorities on the West Coast of North America in varying degrees. All North American West Coast port authorities are enhancing the efficiency of their port by providing additional services such as extended gate hours, mandatory trucker appointments, and new technological interfaces. Additionally, the ports of Los Angeles and Long Beach have a long history of close cooperation on various projects. The ports of Seattle and Tacoma are cooperating even more closely since they created the Northwest Seaport Alliance. Moreover, all West Coast ports are cooperating with external parties such as railways, stakeholders in advisory councils, logistics companies, and even Asian ports to improve their competitiveness. Finally, strategies to become more proactive and agile by reassessing existing services are a lot less common and only implemented by the Northwest Seaport Alliance. Hence, mainly cooperation and the provision of additional services is adopted by North American West Coast port authorities, although the Northwest Seaport Alliance also aims to become more agile.