Rail connect to Humboldt seaport not a game changer

Patrick Meagher, Weaverville

Trinity Journal, 6/29/16


This is in response to the article “Grant awarded for rail connect study” in the Trinity Journal:

Is it feasible to build a rail line from the “national rail system” in the Sacramento Valley to the proposed Humboldt Bay Seaport? Of course it is — given enough money to build it. If you build it, will the merchant ships loaded with shipping containers come to Humboldt? A resounding no is the answer, and here are the reasons why.

To start with you need to understand the problems identified in the Port of Humboldt Bay Harbor Revitalization Plan of February 2003, page 11, paragraph 2. It states as follows, “The scenarios that include a public general cargo terminal are not recommended because they are not supported by market analysis and they involve an unreasonably high level of risk. Almost all of the markets that would be involved in public general cargo terminal operations were identified as unattractive in the prioritization analysis, and Humboldt Bay was found to be uncompetitive in most of them as well. The ‘build it and they will come’ nature of public general cargo terminals, combined with short contract terms common in the trade, high customer leverage, and intense port competition, would result in excess capacity and level of risk that is not commensurate with the limited market opportunity available.”

Next, has anything changed since 2003 to improve the outlook for a shipping terminal in Humboldt Bay? No, not really. Stephen Carmel, senior vice president of Maersk Line Limited, tells us that today over half of all container cargo is component level goods and materials destined for manufacturing and assembly plants or just-in-time inventory-management systems.  This means consistency, reliability and shipping schedule integrity are of paramount importance.  The key goal of container shipping today is 99 percent on-time delivery.

On-time container cargo discharge and loading with intermodal terminal container transfer providing immediate access to main line rail networks are an absolute necessity for profitability.  Container ships operate in networks or routes of many ports serviced by multiple ships on steady schedules. These maritime operations are a considerable part of the overall cost-efficiency picture of intermodal container shipping service.

Finally, there is the biggest issue, economies-of-scale. Cost of shipping is determined by cost-per-container. In other words, the larger the ship the more containers it can carry and total cost of transportation goes down. As an example, container ship Benjamin Franklin, operated by CMA, CGM and loaded with 18,000 containers called at the ports of Oakland and Los Angeles in late 2015. 11,229 containers were handled in Los Angeles using nine cranes during her 90-hour stay, generating an average berth productivity of 200 moves per hour.

So, how does the proposed Humboldt Bay Seaport stack-up against this kind of operation? It doesn’t and won’t. The Humboldt Bay Seaport is too small and isolated, even with a proposed 100-plus mile rail feeder line, to compete economically with container ports such as Oakland, with intermodal loading adjacent to the port, and the Los Angeles complex with portside intermodal loading. The point of this discussion regarding potential for Humboldt Bay Seaport is that it is still economically non-competitive with other West Coast cargo ports. Given this, there is no reason for rail-connect from Humboldt Bay to Sacramento Valley.

Well, the Transportation Commission has $276,000 to do the study, so how about the commission updating the 2003 Humboldt Bay Revitalization Plan (don’t tell me it doesn’t have anything to do with the proposed rail line as I have just demonstrated it has everything to do with it) as a starting point and use its recommendations to determine economic payoff for the rail line. Couple this with interviews of maritime shipping line executives to determine viability of a proposed Humboldt Bay Seaport as a marine cargo destination and departure point and, oh by the way, in case you didn’t know there is still no cargo handling infrastructure of any kind at the proposed Humboldt Bay Seaport.

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