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North American container port capacity: a literature review.


International marine container volumes have surged over the last several decades, but North American ports and their supporting container distribution networks have struggled to increase capacity to match this expansion. This article seeks to review and organize existing container network capacity literature into a taxonomy based on the interrelated stakeholders of container flows. The article first establishes the industry capacity situation, then examines research of capacity influences from stakeholders, including port authorities, terminal operators, longshore labor, shippers, railroads, drayage carriers, intermediaries, ocean carriers, governments, and local communities. Ultimately, the article attempts to establish the urgency of container network capacity problems and identify areas needing further research.


Marine container transportation is vital to both the North American and global economies. Almost $1 trillion of goods in more than 39 million TEUs (1) moved through North American ports in 2003 (National Chamber Foundation of the U.S. Chamber of Commerce 2003; American Association of Port Authorities 2004). As can be seen in Chart 1, this volume represents another year of consistent and rapid growth. Driven heavily by imports from Asia (Mongelluzzo 2004d), North American port volumes have increased an average of 7 percent per year since 1990 (Chart 1), and forecasts indicate this growth will continue ("Drewry Predicts Strong Market until End of 2005" 2004). In fact, one report by the U.S. Chamber of Commerce (2003) predicts that container port volumes will at least double by 2020, with some individual ports seeing triple or quadruple growth.


Despite the increasing demand, North American container ports and their supporting distribution network have not expanded capacity to match the volume growth. One study indicates that most major North American ports are already operating at or near full capacity and will have significant capacity deficits by 2010 (National Chamber Foundation of the U.S. Chamber of Commerce 2003). Another study predicts southeast U.S. ports will reach maximum capacity within eight years (Wilbur Smith Associates 2001). Exacerbating the problem is the fact that railroad and truck carriers serving the ports are also facing severe capacity shortages ("Capacity Crunch Continues" 2004; Kulisch 2004b) and that supporting road infrastructure suffers from increasing congestion problems (Federal Highway Administration 2004; Texas Transportation Institute 2004). The current capacity situation even has foreign shippers questioning imminent North American capabilities to meet capacity requirements (Armbruster 2004a).

Evidence of capacity problems has been emerging for several years. A two-week labor strike at U.S. West Coast ports in 2002 stranded more than 200 ships and 300,000 containers (Gooley and Cooke 2002) because other ports did not have the capacity to accommodate redirected shipments. The strike required presidential intervention as the delays cost an already weak U.S. economy $1 billion a day (Keane 2004). 2004 peak season volumes at Los Angeles and Long Beach, the largest North American ports, more than doubled projections, causing severe congestion (Mongelluzzo 2004b). This congestion instigated record volumes at other ports as shippers and ocean carriers diverted shipments to minimize delays (Leach and DiBenedetto 2004; Leach 2004b; Leach 2004e).

Expanding system-wide container capacity is extremely difficult. For one reason, container flows involve a series of linked capacity factors driven by different stakeholders such as ports, railroads, truck carriers, and steamship lines. While on the surface the problem appears to be a direct application of Goldratt's theory of constraints (Goldratt 1997; Goldratt and Cox 2004), there are complicating factors. Container flows may be identified as the drum (i.e., primary, pace-setting) constraint, but their handling involves a series of linked factors controlled by the stakeholders. As a result, maximum capacity is controlled at different times by these potentially uncooperative stakeholders, so no gains will materialize until and unless all stakeholders jointly cooperate to increase capacity.

Capacity expansions also require significant capital investment and lead time. Ports must build multi-million dollar terminals, dredge waterways, and implement technology improvements amidst defying labor unions. Railroads must add track, locomotives, and personnel. Truck carriers must find drivers and build power units under tightening environmental regulations while facing worsening road congestion. Beyond cost and lead time concerns, many ports have little or no room left to augment space, so capacity improvements must occur primarily through enhancements to existing port facilities and labor. However, the potential impact of productivity increases may be limited since the efficiency of North American ports has lagged well behind that of foreign ports (National Chamber Foundation of the U.S. Chamber of Commerce 2003). Additionally, capacity is affected by issues with the operational, documentation, and security compliance efficiency of railroads, truckers, ocean carriers, shippers, and Ocean Transportation Intermediaries (OTIs). (2) Delays at any or all of these points in the chain can reduce container throughput velocities and subsequently tie up capacity longer then necessary. Further compounding the problem are unpredictable changes in security requirements, terrorist activities, military deployment (Thomchick 1993), labor strikes, and inclement weather. All of these may cause significant capacity reductions with little or no prior warning.

Facing a serious system-wide capacity problem that is projected to worsen each year, North America is not prepared to meet the anticipated growth of international marine container volumes. Although the need to improve the marine transportation structure has been identified for at least five years (U.S. Marine Transportation System Task Force 1999), no immediate large-scale plans exist to address capacity shortfalls due primarily to a lack of coordinated planning by the extensive and complex array of stakeholders. The ultimate supply chain consequences could be severe. Insufficient container capacity will drive up shipping costs, trigger delivery delays due to congestion, and force shippers and consignees to retain higher inventory levels to address increased supply uncertainties. This problem will extend to domestic shippers and consignees as well since international transportation volumes compete for the same railroad, truck, and road capacity as non-international shipments.


Given the magnitude and urgency of North American container capacity issues, this article reviews existing literature relative to the marine container distribution network. By aggregating and organizing previous research, the article seeks to define the scope and complexity of container capacity problems as well as establish key capacity drivers. Ultimately, this review seeks to both isolate research gaps and identify critical topics for future research.

Due to the expanse and complexity of the container distribution network, the corresponding literature base is extremely diverse, reaching across many academic fields and orientations. To maintain focus and parsimony, this review concentrates primarily on logistics, transportation, and operations literature with some extensions into other fields to provide perspective. Emphasis is placed on research that offers insight into factors that affect either network container capacity or the consequences associated with capacity issues. The review concentrates on academic research but includes references from industry literature to maintain connections with relevant practitioner concerns.

The article will begin with a brief overview of the worldwide container transportation industry, then organize capacity issues and subsequent literature into a taxonomy based on the interrelated operational and strategic stakeholders of container flows (Figure 1). Operational stakeholders are identified as those who are directly involved with at least one stage of container distribution including landside (shippers, railroads, drayage carriers, and OTIs), port (leadership, terminal operators, and labor), and waterside (ocean carriers) resources. Strategic stakeholders, including governments and the local port communities, are also included in the analysis as they significantly impact capacity and stand to suffer from capacity issues.


Malcolm McLean pioneered the first domestic marine container shipments in 1956 based on his observations of the inefficiencies of break-bulk marine shipping at the time. McLean later forged the first international container shipments in 1966. Less than ten years later, more than sixteen million containers were being shipped internationally, and the growth has essentially never subsided. Slack (1999) provides a good overview of the evolution and growth of container volumes, and Talley (2000) chronicles the technological impact of containerization on the maritime industry. Containerization has significantly contributed to world trade expansion, fueling near double-digit import and export growth of emerging economies in Asia, the Middle East, and Latin America (World Trade Organization 2003). Two papers examine the macro impact of this trade between nations, including the influence of ports (Boske and Cuttino 2003; Wilson et al. 2003).

Container Volumes

The United States is both the leading importer and exporter in the world, and Canada and Mexico rank among the top fifteen countries (World Trade Organization 2003). Table 2 presents the largest ports by 2002 TEU volume of both North America and the world. Although there are more than 100 public port authorities within North America, the top twenty ports handled 89 percent of the total TEU volumes, with the top forty ports handling 99 percent (American Association of Port Authorities). This concentration is driven by economies of scale with terminal container handling and vessel size. Smaller ports seeking to grow market share must acquire hundreds of millions of dollars for capital investment in port facilities as well as synchronize rail access expansion and road infrastructure development. In light of these challenges, the major ports have tended to bear most of the aforementioned 7 percent annual increases in container volumes.

Worldwide container growth has resulted in only three North American ports being ranked among the twenty largest in the world, and only ten are within the world top fifty (American Association of Port Authorities 2004). Though not all foreign ports have capacity issues like North America (Terada 2002), at least some do face problems stemming from rapid volume growth (Fabey 2000; Trunick 2004a). However, driven by strong national policy, ports outside of North America, particularly those in Asia, have historically been able to rapidly expand capacity through effective planning and efficient use of technology and labor, allowing them to maintain capacity growth and maximize their return on investment. This agility has allowed foreign ports to be extremely efficient. One study indicates that Asian port efficiency is as much as three times higher than North American ports (National Chamber Foundation of the U.S. Chamber of Commerce 2003). Another report found that most critical services of U.S. and Canadian ports are rated lower than that of both Europe and Asia, but U.S. and Canadian port costs were considered to be higher (United States Department of Transportation Maritime Administration 2002).

Container Flows

The intermodal requirements of international container transportation result in multiple operational stakeholders. A shipper will load a container, which is then drayed by truck either directly to the port or to a rail terminal for transport to the port. If the container is not directly loaded onto a ship, further drayage occurs within the port to support positioning and storage. The port terminal operator will ultimately load the container onto the ship for carriage to the destination port, where the entire process reverses for delivery to the consignee. Ironically, the shorter land-based elements of container transport often cost more than the marine portion due to the operational efficiencies of the container vessels. Counting the shipper and consignee, a container may be handled by as many as eight or more operational stakeholders, not including documentation and support services provided by OTIs. The next section will break down the landside, port internal, and waterside activities by these key stakeholders, identifying capacity problems and consequences.

Landside Capacity

Landside container transport involves the distribution of containers to and from the ports by stakeholders including shippers, drayage carriers, railroads, and OTIs. The railroads and truck carriers currently present the most urgent capacity impacts, though shippers and OTIs influence capacity as well.


Although shippers generate the container volumes that can instigate capacity problems, they can do little to directly alleviate the situation given the fact that there are no cost-effective alternatives to marine container service. One opportunity shippers do have to relieve capacity problems that is addressed in the literature is the efficiency of container packing/ filling. More efficient container packing can lower the number of containers required for shipment, minimizing the required container volume for the entire network while lowering shipper transportation costs. Several articles propose quantitative-based solutions for the container packing process (George and Robinson; Bischoff and Ratcliff 1995; Chen et al. 1995; Chien and Wu 1999; Roan et al. 2000; Williams et al. 2000; Bortfeldt and Gehring 2001; Pisinger 2002). Other papers supplement container packing research with consideration of weight distribution and stability factors (Davies and Bischoff 1999; Eley 2002), which can affect product damage. Software packages do exist to help shippers with container packing though no relevant academic research addressing container volume reductions was found.

Drayage Carriers

Drayage carriers primarily handle short to medium distance movements to and from the ports and rail terminals. Due to port congestion, these carriers often face unpredictable and extended wait times. Another complicating operational problem is equipment ownership. Most containers are owned by ocean carriers and leasing companies, and in the United States, the same is true of the container chassis. This separate stakeholder ownership causes complications in balancing the scheduling and routing of containers, chassis, and power units to separate locations.

Many small drayage carriers provide regional port-area transport only, but larger truckload (TL) carriers also provide both local and national drayage services. A general increase in truck volumes combined with driver shortages (Dobie et al. 1998; Min and Lambert 2002), unsettled hours-of-service laws (Cooke 2004), rising insurance costs, and new engine environmental regulations (Gottlieb 2001; Leavitt 2003) have forced a current truck capacity shortage ("Capacity Crunch Continues" 2004; Kulisch 2004b). Given the aforementioned delays due to port congestion and equipment positioning problems, truck carriers tend to favor standard over-the-road moves versus dray moves. As a result, drayage capacity has suffered significantly as overall trucking capacity has tightened.

Several articles offer promise for improved truck drayage operations (Walker 1992; McGuckin and Christopher 2000; Wang and Regan 2002). Danielis and Marcucci (2002) propose pricing approaches for truck service to compete with rail while considering congestion problems. Load weight is often a key factor affecting viability of drayage shipments given road and bridge weight limits. Addressing this situation, Hayuth (1994) asserts the need for a national review of weight policies, while Rao and Young (1992) suggest weight limit increases as well as subsequent transloading of shipments to lower the inland transportation costs of international shipments.


Railroads are generally more cost-efficient than truck for handling inland container moves of significant distance, though transit times and other service factors may be compromised. Presenting a shipper' s view, Evers and Johnson (2000) address service issues including communication, transit times, and delivery reliability. Despite inherit service challenges, intermodal container transport represents the most rapidly growing revenue stream for the railroads (Bernstein 2004; Kaufman 2004) though the per-car profit margins tend to be lower than that of other rail commodities. Turner, Windle, and Dresner (2004) provide a very complete overview of the rail intermodal industry and suggest opportunities to improve stakeholder relationships to enhance competitiveness of the channel.

Many ports have worked with railroads to develop on-dock rail service to improve container velocity and reduce required handling. Turner, Windle, and Dresner (2004) highlight the importance of rail-port connections to port efficiency, and Bana e Costa, Nunes da Silva, and Vansnick (2001) address conflict resolution associated with construction of on-dock rail services. Similarly, Koh (2001) offers an approach to investment problems in intermodal rail networks in order to support port growth.

Like trucking firms, railroads currently face severe capacity issues, experiencing shortages in equipment and personnel compounded by heavy network congestion even before the 2004 peak-season (Kulisch 2004b). Both Cottrill (1997) and Wong (1994) discuss the rapid growth of intermodal rail transport and address subsequent capacity issues. To help rail capacity, a large body of research offers support for improvements to intermodal operations. Machaffs and Bontekoning (2004) present a review of operations research-based intermodal literature, while Jansen et al. (2004) highlight rail and drayage efficiency attained by Danzas Euronet. Several papers focus on rail terminal enhancements, including terminal transfer efficiency (Kozan 1997), ramp selection (Taylor et al. 2002), terminal location (Arnold et al. 2004), key terminal service elements and barriers (Stank and Roath 1998), and terminal facility sharing to reduce required investments (Evers 1994). Train and railcar routing and scheduling effectiveness are also supported by several works (Barnhart and Ratliff 1993; Newman and Yano 2000; Yano and Newman 2001).

Ocean Transportation Intermediaries (OTIs)

OTIs, which include freight forwarders, customs brokers, and non-vessel operating common carriers (NVOCCs), directly support international container movements. Basic services of forwarders and brokers include documentation compliance for export and import, respectively, but many have expanded to third-party logistics (3PL) status by offering ocean bookings, inland transportation planning, shipment consolidation, and other functions. NVOCCs primarily provide booking and consolidation services but also frequently offer 3PL functionality.

OTIs can reduce container throughput velocity and increase port congestion issues with documentation non-conformances and other communication delays. Subsequently, EDI and other electronic data exchange capabilities have been identified as critical OTI capabilities. Murphy and Daley (Murphy and Daley 1996; Murphy and Daley 1999; Murphy and Daley 2000) offer several works examining EDI use by forwarders, including both benefits and barriers. Hardaker, Trick, and Sabki (1994) also investigate EDI benefits for forwarders, while Hellberg and Sannes (1991) review EDI use for customs clearance. Although no research was found on the subject, it is worthwhile to note that many OTIs are now using ocean-carrier-sponsored Internet portals to handle documentation and bookings.

Internal Port Capacity

Internal port capacity is a multi-dimensional challenge. Although a marine container port may appear to be a single entity, it generally consists of several stakeholders, including the port authority/leadership, terminal operators, and labor.

Port Authority/Leadership

Overseen by either a civil government or a private board, the port authority owns the port facilities, though they do not necessarily provide dockside operations. This leadership is primarily concerned with the planning, development, and growth of the port facilities, though performance and security are also key issues. Readers should bear in mind that such activities apply not only to container volumes but also to an additional $1 trillion of non-containerized cargo flowing through North American ports (American Association of Port Authorities).

Several works address port planning and development (Comtois 1999), including investment priorities (Koh 2001) and the use of simulation to support growth planning (Park and Noh 1987; Luo and Grigalunas 2003). Cottrill (1997) identifies the critical need for port expansion and points to capital development as a critical issue. Ircha (2001) presents an analysis of Canadian port reform, highlighting issues regarding access to growth capital. Slack (1993) recognizes that even though port authorities are responsible for the financial development of the port, their ultimate destiny is often well beyond their own influence. Likewise, Moglia and Sanguineri (2003) and Turner, Windle, and Dresner (2004) emphasize the need for coordinated stakeholder support for port facility development.

Regarding facilities, waterways and land remain two major capacity issues for ports. To maximize marine efficiencies, container ship sizes have consistently increased, with 8,000 TEU vessels already calling some ports and 9,600 TEU ships currently on order. Bigger ships require deeper waterways, and many ports must devote significant capital to channel dredging. Several articles address dredging challenges, costs, and capital recovery (Mohan and Palermo 1998; Alcorn and Foxworthy 2001; Ashar 2003). Beyond the size of the waterways themselves, Mastaglio (1997) highlights bridge accidents, an additional potential problem associated with larger vessels.

With respect to land, many ports no longer have much land available for expansion. As an innovative solution, some ports, such as Los Angeles, are using dredged materials to create land (McNeilan and Foxworthy 1993; "Ports Desperate for Space and Dredging Options" 1998). With little coastal land available, inland facilities represent a promising port expansion opportunity. Containers can be railed or barged in mass directly from vessels to inland facilities for individual handling and distribution, increasing overall port throughput while decreasing drayage costs and road congestion. As one example, the Port of Virginia has established facilities 220 miles inland with full rail, truck, and customs services. Notteboom and Winkelmans (2001) recommend development of inland facilities to address port expansion requirements, and Walter and Poist (2003) examine desirable characteristics of an inland port from both carrier and shipper perspectives.

Port performance, especially relative to competition, also remains a critical concern of port leadership. A few papers consider the importance of port competitive positioning (Comtois 1999; Marcadon 1999), and Slack (1993) indicates even large facilities are not exempt from competitive pressures. Several works investigate port competitive factors using mathematical modeling (Malchow and Kanafani 2001; Nir et al. 2003), analytical hierarchy process (AHP) (Lirn et al. 2004; Song and Yeo 2004), surveyed opinions (Murphy et al. 1988; Murphy et al. 1989; Murphy et al. 1991; Murphy et al. 1992; Murphy and Daley 1994), and case studies (Cheung Ho 1992; Flor and Defilippi 2003; Garrido and Leva 2004). Two papers identify competitive elements outside of port control (Tiwari et al. 2003; Malchow and Kanafani 2004), while Veldman Buckmann (2003) presents port traffic and market share forecasting techniques. From a port relationship viewpoint, Heaver et al. (2001) assesses competitive and cooperative elements of inter-port relationships, and other studies indicate the need to increase cooperation among competing ports to seek out strategic and operational synergies (Fleming and Baird 1999; Song 2003). Paixao and Marlow (2003) suggest that ports should enhance their agility in response to increased competition and market uncertainty. For shipper performance perceptions, Bennett and Gabriel (2001) examine how ports can improve relationships with shippers, and Lopez and Poole (1998) imply the importance of port service provider quality for customer assurance of port capabilities.

Related to competition and performance, other research addresses efficiency assessments of ports, and Park and De (2004) provide a strong literature review of port efficiency modeling. Port efficiency has been assessed by survey methods (Sanchez et al. 2003), data envelopment analysis (DEA) (Park and De 2004; Turner et al. 2004), and other mathematical techniques (Kim and Sachish 1986). Some papers focus on both cost and performance measurement (Talley 1994; Jara-Diaz et al. 2002), while Tongzon (1995) assesses the impact of port efficiency on performance. Paik and Bagchi (2000) examine how process re-engineering combined with technology can improve port operational productivity. Similarly, benchmarking has been presented as another option for port assessment of efficiency and competitive positioning (Cuadrado et al. 2004).

As another influence of port capacity, security remains an important and extremely timely concern of port leadership, which must coordinate investment and planning for security regulations with other port operational stakeholders. Though security has improved in the wake of recent world violence, container traffic is still not completely secure from terrorist activity, and port security funding is still generally considered insufficient (Trunick 2004c). Port security has been recognized as an issue even before the September 11, 2001 terrorist attacks (Murphy et al. 1988; Murphy et al. 1989), and Stephens (1989) presents an early look at port security barriers.

The U.S. Department of Homeland Security (DHS) has established programs to improve container and port security. C-TPAT (Customs-Trade Partnership Against Terrorism) validates security processes and protocols of shippers, and CSI (Container Security Initiative) targets foreign-shipped containers for advanced screening (Kulisch 2004a). However, the DHS has been criticized for its disorganization and in-fighting (Kulisch 2004c) ("U.S. Maritime Security Less Than Advertised, Security Experts Warn" 2004), and some industry experts have indicated that maritime security funding is not sufficient ("AAPA's Nagle: Federal Budget Cuts Port Security Grant Program" 2005). Beyond that, it is still not clear from where all the funding for security will come (Trunick 2004b).

Some research is now emerging to assess maritime security (Stasinopoulos 2003) as well as examine security best practices, including information systems (Kevan 2004; Noda 2004), sensors (Durstenfeld et al. 2003), container tracking (Kia et al. 2000; Fortner 2002), and gate traffic (Cruz and Nye 2002). Noda (2004) discusses ocean carrier roles in enhancing security through linked systems, and radio frequency identification (RFID) also offers potential security enhancements (Machalaba and Pasztor 2004). Overall, container security regulations, technologies, and processes are still evolving, and ports must ensure security advancements do not prove detrimental to capacity.

Terminal Operators

Terminal operators, which are often independent entities from the port authority, manage the physical dockside operations of the port, primarily including container loading, unloading, and storage. These operators are challenged to maintain efficient portside operations in combination with effective coordination with railroad, drayage carriers, and labor unions. Lopez and Poole (1998) describe key port operational processes, and De Souza et al. (2003) offer an exploration of terminal operator strategy and development.

Since many terminal operational processes contain mathematically compelling properties, an abundance of operations research studies have examined optimization of port processes. Vis and Koster (2003) present a good literature review of optimization research in the area. Several papers use simulation to assess multiple functions of terminal operations simultaneously (Yun and Choi 1999; Tahar and Hussain 2000; Gambardella et al. 2001; Shabayek and Yeung 2002), while Bish (2003) does the same with mathematical programming. With respect to individual terminal processes, the most prevalently examined topic by existing research is container loading and unloading, including crane scheduling (Martin et al. 1988; Avriel and Penn 1993; Kim and Bae 1998; Kim and Kim 1999b; Kim and Kim 1999c; Chung et al. 2002; Narasimhan and Palekar 2002; Zhang et al. 2002; Kim and Kim 2003; Kim and Bae 2004; Kim and Park 2004; Kim et al. 2004). Ship scheduling and berthing are examined in many articles (El Sheikh et al. 1987; Kim and Lee 1997; Lira 1998; Nishimura et al. 2001; Guan et al. 2002), as are container storage (Sculli and Hui 1988; Kim and Kim 1999a; Preston and Kozan 2001; Kim and Park 2003; Zhang et al. 2003), and delivery and receiving (Kim et al. 2003).

Due to the complexity of operational processes and coordination, systems and technology play a critical role in terminal operations. Wan, Wah, and Meng (1992) examine the role of port technology, and Bagchi and Paik (2001) describe port collaboration with the private sector for systems development. Veras and Walton (1996) find that although technology is pervasive at ports, additional opportunities exist for technology improvements, including container identification, container location, gate processes, and carrier/agent connections. Several studies address the use of EDI in terminal operations (Cuyvers and Janssens 1992; Garstone 1995), while others compare port operations with and without electronic container tracking capability (Kia et al. 2000). Finally, Schwarz-Miller and Talley (2002) address the critical tendency of longshore labor unions to hamper implementation of port technology in order to protect jobs.


While terminal operators manage port operations, they usually must collectively bargain with unions for labor services such as container loading and unloading. As demonstrated during the 2002 U.S. West Coast strikes, the longshore unions tend to retain strong bargaining positions and enjoy relatively generous compensation packages (Mongelluzzo 2004c). Ironically, the evolution of containerization led to the loss of the majority of longshoreman jobs, prompting the unions to fiercely protect remaining personnel (Vigarie 1999). Talley indicates the strength of longshoremen bargaining power (2004) and also examines union wage growth (2002). To facilitate labor productivity improvements, several studies employ mathematical programming and simulation to optimize scheduling of work crews and equipment operators (Silberholz et al. 1991; Kim et al. 2004; Legato and Monaco 2004). Overall, North American port labor efficiency and resistance to technology enhancements (Schwarz-Miller and Talley 2002) remain major obstacles to port capacity growth, especially for ports that are unable to expand facilities.

Waterside Capacity

Existing research on the waterside activities of container distribution focuses primarily on ocean carriers. Pilotage, tug, and towing services also represent additional waterside elements. Very little literature exists on these subjects at this time, however.

Ocean Carriers

Also referred to as steamship lines, ocean container carriers operate in a unique competitive environment. Protected from many facets of anti-trust regulations, the carriers participate in conferences to discuss both market conditions and rates in the attempt to stabilize profitability. A detailed assessment of the conference system is beyond the scope of this article, but readers may reference several works for awareness of the topic (see Clarke [1997] and Slack, Comtois, and McCalla [2002]). Industry consolidation has reduced the number of ocean carriers, and most remaining players share vessel space to maximize operational and capital efficiencies. Regardless of the conference system and vessel sharing, ocean carrier profitability remains relatively unstable, but vessel capacity has not historically proven to be a major capacity issue.

Given the significant capital and operating expenses of container vessels, ocean carriers have found efficiencies in increasing ship size. Cullinane and Khanna (1999) discuss the economies of ship size, and Talley (1986) indicates that bigger vessels are advantageous to ocean carriers. It is interesting to note that ship size has proven to be both a major boost and impairment to overall system-wide capacity. While larger ships can increase capacity and lower shipping costs, many ports do not have the equipment, facilities, and waterways to accommodate the larger vessels. Additionally, larger ships lead to greater unevenness of container flows as more containers arrive and depart during port calls (Mongelluzzo 2005). This further strains port, railroad, and drayage peak operational requirements.

Network capacity problems cause significant issues for ocean carriers. For example, congestion-related vessel delays, schedule adjustments, and diversions reduce overall available capacity. One carrier executive estimates this could add up to several percentage points in peak season (Mottley 2005). As another example, carriers must also overcome congestion effects on the distribution of empty containers. As demonstrated by the current $600 billion U.S. trade deficit, North American import growth has rapidly outpaced that of exports. This has created an imbalance of container flows that necessitates carriers move many empty containers out of North America to be used for pending imports. Ocean carriers attempt to optimize the matching of delivered imports to export orders to minimize empty movements and improve cycle times, but empty container management still represents an unavoidable and significant portion of the lines' cost uncertainty. Several papers analyze empty container positioning at ports (Gao 1994; Lai et al. 1995; Shen and Khoong 1995), and Choong, Cole, and Kutanoglu (2002) research the planning horizon for empties on barge shipments. Hahn (2003) examines container positioning at Los Angeles/Long Beach, CA and indicates that global container availability, especially in Asia, is more important than local North American empty container flow optimization.

As a third capacity issue, ocean carriers must cope with customer service problems created by system-wide capacity shortages. When shippers and customers face service problems with container shipments, the steamship lines generally accept responsibility for resolution, even though the problem origin may lie with ports, railroads, or truck carriers. Two works assess ocean carrier service quality and satisfaction (Durvasula et al. 2000; Durvasula et al. 2002), while Durvasula, Lysonski, and Mehta (1999) test a scale for ocean line customer service. Highlighting key service issues, several articles assess shipper selection criteria of lines (Semeijn and Vellenga 1995; Lu 2003), with Kent and Parker (1999) denoting key differences between shipper and liner perceptions of important factors. Shashikumar and Schatz (2000) indicate that shippers do not necessarily trust ocean carriers and present recommendations to improve shipper relationships.

Strategic Stakeholders

In this section, we consider two additional stakeholders in North American ports: governmental agencies and local communities. While not directly involved in container operations, these stakeholders do play important roles in a container capacity.


From a macro perspective, container network capacity is dynamically related to government policy as both a source and a target. As a source, capacity and congestion problems can significantly impact economic stability and subsequently heavily influence government policy. For example, container volume growth has been primarily driven by imports, as validated by the continually widening U.S. trade deficit ("U.S. Trade Deficit Sets Another Record" 2005). So network congestion impedes the stability and timeliness of inbound supply networks, and this inbound congestion then obstructs export flows. From a target perspective, government policies and actions can significantly affect container network capacity. For instance, federal deficit challenges will reduce available funding for highway, security, and other capacity investments. Also, rising interest rates could dissuade private and public borrowing for capacity expansion, but tax policies can be used to encourage corporate investment in capacity, especially relative to the railroads and truck carriers.

Looking at one specific policy target influence, governments directly impact container capacity through highway and local road infrastructure. Research indicates that road capacity shortfalls and subsequent congestion have emerged as critical issues among truck carriers. A 2004 report to the Federal Highway Administration (2004) indicates that road congestion is getting worse in cities of all sizes, causing higher fuel expenses and pollution while instigating delivery reliability and safety issues. The 2004 Urban Mobility Report from the Texas Transportation Institute (2004) shows that since 1982, peak-hour delays have tripled while the financial impact of congestion has more than quadrupled to $63 billion annually. Specific to container flows, a 2002 U.S. Department of Transportation Maritime Administration report (2002) found significant vehicle access limitations at many container ports.

Several research studies address congestion issues. Pope et al. (1995) as well as Kia, Shayan, and Ghotb (2002) offer simulations of congestion issues in or near ports, and Golob and Regan (2002) examine how truck carriers obtain congestion information to minimize operational impacts. Survey research of truck carriers in California has validated road congestion as a significant problem (Regan and Golob 1999; Golob and Regan 2001) and suggests relief options such as improved scheduling, longer port hours, advance clearance systems, and truck-only roads for port access (Golob and Regan 2000; Regan and Golob 2000). Other literature also offers similar suggestions (Rao et al. 1991; Rao and Grenoble 1991; Golob and Regan 2003). Short-sea shipping solutions can reduce the need for over-the-road transport. The European Union (EU) is promoting short-sea transport (Becket et al. 2004), but the U.S. generally has not pursued the option (Leach 2004c; Edmonson 2005b). One article assesses routing for feeder ships to support container distribution (Sambracos et al. 2004).

In addition to impacts on road infrastructure, some practitioners contend that government should play a stronger role in coordinating North American system-wide capacity solution planning (National Chamber Foundation of the U.S. Chamber of Commerce 2003). Chlomoudis and Pallis (2002) argue the same for Europe, and the European Commission is currently attempting to implement productivity improvements through increased port service competition (Barnard 2004). While not addressing capacity specifically, two papers indicate that U.S. maritime policy is outdated and ineffective (Farris 1982; Shashikumar 1994), and similarly, Goss (1998) critiques the evolution of British maritime policies.

Given the economic stakes involved with container volumes, contentions for a stronger government role in container network capacity planning may have logic. In the United States, the Office of Intermodalism was established within the Department of Transportation to provide planning coordination across multiple modes, but critics maintain the organization has not proven very effective (National Chamber Foundation of the U.S. Chamber of Commerce 2003). The task of the Office of Intermodalism is significantly daunting given that container flows touch upon a multitude of national, state, and local government organizations (see Table 3 for examples), not to mention the ports and thousands of ocean, rail, and truck carriers.


Local communities must also be considered when assessing port capacity issues. Communities directly benefit from port economics (DeSalvo 1994) but also present challenges to container capacity in the form of environmental issues from emissions (Carlton 2003; Sanders 2004), water pollution (Goulielmos and Pardali 1998; "Pollution Fine for Owner of MSC Ship" 2003), and wildlife protection (Armbruster 2004b). There have been several instances of communities attempting to block container terminal expansion due to environmental and other concerns ("Charleston Eyes Smaller Container Terminal Plan" 2000; Machalaba 2004). Kolk and Veen (2002) examine port environmental strategies relative to public interests. Schulkin (2002) overviews numerous cruise ship pollution issues of which several are directly applicable to container vessels as well. Two works examine the environmental impact of dredging on the community (Mohan and Palermo 1998; Alcorn and Foxworthy 2001), and Krueger (2001) illustrates an inventive dredging disposal solution in which the Port of Houston has used dredged materials to create wetlands and islands to support wildlife.


North American marine container volumes exceed forecasts every year (Mongelluzzo 2004e). Facing such surging growth, North America is challenged with multiple capacity issues that appear to be converging simultaneously. Ports must increase container capacity given limitations with land expansion, facilities, efficiency, and labor. Even if the ports can keep pace, railroad and truck capacities are tight, and inadequate road infrastructure has created further congestion issues. Governments and communities also present capacity barriers. All of these stakeholders have historically operated and planned primarily independently of one another. In fact, a National Chamber Foundation report (2003, 31) argues that we "do not have an 'intermodal system' as such but rather "an aggregation of public and private modes" that have yet to significantly coordinate growth planning and strategies. If container volumes double, triple, and quadruple as expected, a massive, synchronized planning organization consisting of all stakeholders must guide capacity growth.

The Alameda Corridor in California represents one positive albeit isolated example of coordinated planning to address capacity issues. Jointly planned by port authorities, rail carriers, and local government, this rail line connects the Ports of Los Angeles and Long Beach with major transcontinental rail lines. It has increased capacity from 35 to 100 trains per day (Bradley et al. 2002) while reducing trip times, traffic congestion, and pollution from emissions (Morton 2002). The project funding of $2.4 billion was raised through public and private sources ("Alameda Corridor Repays Federal Loan Early" 2004), and further subsidies are generated through per container fees to shippers and steamship lines. Initial studies for the project began in 1981, and the corridor formally opened in 2002 after more than five years of construction ("Alameda Corridor Repays Federal Loan Early" 2004). Despite this significant effort, the capacity outlook in the region remains unsettled, in that the rail lines connecting to the Alameda Corridor still face significant capacity issues (Mongelluzzo 2003), and traffic through the Corridor itself is expected to double current capacity by 2010 (Mongelluzzo 2004a).

Beyond the Alameda Corridor, some efforts have been made to address capacity issues ("West Coast Ports Address Impediments to Trade Flow" 2004), but there is no large-scale, coordinated strategy in place to ensure container volumes will not quickly outstrip system-wide capacity. A range of consequences associated with a shortfall in container network capacity could result. One of the least problematic is that shippers must endure shipment delays as well as higher costs from congestion and extended peak-season surcharges. This is already the case at some ports such as Los Angeles and Long Beach. As capacity issues become more critical, shippers may face higher freight rates and overall reductions in service and reliability. Businesses, in turn, will increase inventory levels to balance against the additional uncertainty, and supply shortages could cause temporary plant shutdowns similar to those in the weeks after the September 11th tragedy. In the extreme case, severe capacity shortages could negatively impact world trade, potentially instigating worldwide economic decline.

The capacity of container ports and the supporting distribution network is an urgent and significant concern. This article has reviewed literature relative to the numerous factors that influence container capacity in North America. Although research does exist to address particular elements of capacity, very little effectively identifies the magnitude of the problem or assesses conditions from a complete, systemwide viewpoint. More robust container network research is needed to clarify capacity issues, identify causes, and facilitate resolution. Readers can possibly draw many compelling research opportunities from the body of this article, but several critical streams are further identified below.

* Forecasts of container volumes and capacities--While the basis for a container network capacity problem is unmistakable, more detailed, reliable volume and capacity forecasts by region are needed to further validate the magnitude, timing, and urgency of capacity issues. Such forecasts will allow researchers to estimate and simulate potential impacts of capacity shortfalls and, in turn, motivate resolution planning.

* Key capacity drivers--This article classified many container capacity drivers that are both internal and external to the ports, but additional research is needed to determine which factors and stakeholders present the most immediate obstacles to capacity growth. Researchers could then focus on these crucial drivers to help facilitate industry planning and solution efforts.

* Port efficiency--Much of the North American port capacity growth must come from efficiency increases rather than physical expansion. Given the relative inefficiency of North American ports compared to foreign ports, research could benchmark efficiency drivers and recommend changes for North American ports.

* Port growth planning--Additional exploration is needed to address how ports will support required capacity growth, examining port strategic planning relative to key capacity drivers and stakeholders. Such work could not only focus on major ports but also incorporate smaller ports that are in position to expand to fill capacity gaps. Likewise, shippers do not currently tend to use Mexico ports as alternatives for U.S. and Canada imports, but research could examine improvements to NAFTA operations to revolutionize the growth of Mexico port facilities to support North American container flows.

* Stakeholder and system growth planning--Like port growth planning, more research can be conducted to examine individual stakeholder growth preparation as well as how the ports and associated stakeholders can synchronize growth planning efforts to ensure future system-wide container capacity. Based on historical precedence, some stakeholder such as railroads and truck carriers may have significant concerns about developing excess capacity, fearing exposure if future volumes are over-forecasted.

* Government leadership--Many practitioners feel the government needs to provide stronger leadership and more robust policy for the port, railroad, and highway infrastructure. Research could support this as well as investigate potential government alternatives for capacity planning and financing such as tax breaks for private investment.

* Technology and process improvements--Technology and process improvement will most likely prove to be key enablers of efficiency gains and subsequent growth, so additional research in this area would prove extremely valuable. Vital drivers include automating documentation flow, coordinating operations between the port and the railroads, drayage carriers, and OTIs, and further optimizing container scheduling, storage, and tracking. As an example, the Port of Tacoma has demonstrated effective implementation of technology and processes improvements to improve agility (Leach 2004d).

* Labor--Beyond technology and processes improvement, issues with longshore labor unions including efficiency, technology resistance, and cost stand as major impediments to port productivity. Research could further investigate efficiency barriers and resistance to change to support port capacity gains.

* Security--Maritime security remains a critical issue, requiring that ports expand capacity without compromising the safety of North American citizens. With security regulations likely to continue to intensify, more research is needed on container security technology such as electronic seals, container tracking (such RFID), and equipment screening. Research can also assess the effectiveness of Homeland Security programs such as CSI and C-TPAT as well as help determine funding requirements for port security.

* Growth financing--Traditionally funded by government bonds, private investment, and user fees (Bergantino and Coppejans 2000), new port facilities can cost at least several hundred million dollars (see Bartelme 2003 and "New Shanghai Port to Bid Terminals" 2004 as examples), and as terminal expansion becomes more resourceful due to limited land, these costs will certainly increase. Likewise, rail and road expansion are also extremely costly. Research could help formulate innovative, untapped capital resources to enable port and supporting network capacity growth. Examples might include joint private-public programs or the use of tax breaks to stimulate investment.

* Strategies for capacity interruptions--Since most ports are currently operating at high capacity, there is little room in the network to absorb capacity interruptions caused by military deployments, labor strikes, weather disasters, terrorism, and other incidents. Research could support government contingency planning (Edmonson 2005a) for capacity interruptions to minimize system-wide impact.

These suggestions are by no means exhaustive but do illustrate the depth and range of the research that is needed to begin to address emerging capacity problems in ports and container distribution networks. As the global economy grows, an efficient logistics system must expand with it, and practitioners and the popular press have begun to identify the potential capacity shortfalls. Academic researchers should take more initiative and leadership to actively address these issues and identify not only the problems but potential solutions as well.
Figure 1. Stakeholders of Container Capacity

Operational Landside Shippers
Stakeholders Dray Truckers
 Port Port Authority/Leadership
 Terminal Operations

 Waterside Ocean Carriers

Strategic Government
Stakeholders Community

Table 1. Container Capacity Influences

 Internal Port External Port
 Capacity Factors Capacity Factors

 Capital Railroad Capacity and Efficiency
Facilities, Equipment Truck Capacity and Efficiency
 Waterways Steamship Line Efficiency
 Labor Road Congestion
 Technology Shipper Efficiency
 Efficiency OTI Efficiency

 Internal Port Other
 Capacity Factors Capacity Influences

 Capital Security Regulations
Facilities, Equipment Terrorism Activity
 Waterways Military Deployments
 Labor Labor Strikes
 Technology Weather

Table 2. Largest Container Ports by TEU Volume--2002

 2002 Port TEU Volumes (Thousand TEUs)

 North America

Rank Port Country TEUs

 1 Log Angeles USA 6,106
 2 Long Beach USA 4,524
 3 New York/New Jersey USA 3,749
 4 San Juan USA 1,740
 5 Oakland USA 1,708
 6 Charleston USA 1,593
 7 Tacoma USA 1,471
 8 Vancouver CAN 1,458
 9 Seattle USA 1,439
10 Hampton Roads USA 1,438
11 Savannah USA 1,328
12 Houston USA 1,147
13 Montreal CAN 1,055
14 Miami USA 981
15 Honolulu USA 945
16 Jacksonville USA 684
17 Manzanillo MEX 639
18 Port Everglades USA 554
19 Veracruz MEX 548
20 Halifax USA 524

 2002 Port TEU Volumes (Thousand TEUs)


 Port Country TEUs

 1 Hong Kong CHN 19,144
 2 Singapore SGP 16,941
 3 Busan KOR 9,436
 4 Shanghai CHN 8,620
 5 Kaohsiung TWN 8,493
 6 Shenzhen CHN 7,614
 7 Rotterdam NLD 6,515
 8 Los Angeles USA 6,106
 9 Hamburg DEU 5,374
10 Antwerp BEL 4,777
11 Port Kelang MYS 4,533
12 Long Beach USA 4,524
13 Dubai ARE 4,194
14 Yantian CHN 4,181
15 New York/New Jersey USA 3,749
16 Quingdao CHN 3,410
17 Bremen/Bremerhafen DEU 3,032
18 Gioia Tauro ITA 2,954
19 Felixstowe GBR 2,750
20 Tokyo JPN 2,712

Table 3. Example of Government Agencies Impacting Container Flows--U.S.

Local/State Port Authority Agencies
 State Departments
 of Transportation

Federal Department of Federal Highway Administration
 Transportation (FHWA)
 Federal Motor Carrier Safety
 Administration (FMCSA)
 Federal Railroad Administration
 Maritime Administration (MARAD)
 Office of Intermodalism
 Surface Transportation Board

 Department of Transportation Security
 Homeland Security Administration (TSA)
 U.S. Coast Guard
 U.S. Customs & Border
 Army Corps of Engineers


(1) A twenty-foot equivalent unit (TEU) represents a twenty-foot container. A forty-foot equivalent unit (FEU) represents a forty-foot container and is equivalent to two TEUs. Industry standard is to represent volume in TEUs.

(2) OTIs include freight forwarders, customs brokers, and non-vessel operating common carriers (NVOCCs).


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Mr. Maloni is assistant professor of management and Mr. Jackson is assistant professor of management, Black School of Business, Penn State Erie, The Behrend College, Erie, Pennsylvania 16563. The authors wish to thank the three anonymous reviewers for their insight and feedback.
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Author:Maloni, Michael; Jackson, Eric C.
Publication:Transportation Journal
Date:Mar 22, 2005
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