Business is booming for Asia's exporters. That is good news for the world economy, but companies are facing a shortage of cargo ships and containers in Asia, and logjams on the docks in the United States.
A line of trucks moves forward to a gantry crane that lifts a 4,000-kilogram container off a truck every two minutes and glides it onto the deck of the OOCL Osaka. After the Hong Kong-owned ship calls at Nagoya, Kobe and Osaka, it heads to China, loaded with up to 2,700 containers - 11,000 metric tons of cargo.
All over the Pacific, thousands of other ships are sailing heavily loaded with everything from apples to toys. As the world's economy grows, the shipping industry is racing to keep up with demand, especially in Asia, where most economies rely on exports. Cargo is beginning to back up because of a shortage of containers and ships - some Japanese exporters wait three months to get a container on a ship.
The number of containers moving from the United States to Asia during the first quarter rose nine percent compared with a year ago. Sam Saeki, general manager of Kawasaki Kisen's container ships group, says much of that was fueled by China, where a booming economy is not only pumping out exports, but also pulling in imports. "They are importing a lot of the raw materials for energy such as crude oil, coals. They used to be exporting or they were supposed to have enough resources themselves," says Mr. Saeki. "This is giving a very much dynamic change to world shipping."
To keep up, the shipping industry is consolidating into alliances. Many rivals - such as Japanese and Chinese shippers - are working together, to give customers better service and new routes.
But there are limits to how fast the industry can grow. Shipping analyst Osuke Itazaki in the Tokyo office of the investment bank Credit Suisse First Boston says growth above 10 percent causes significant problems. "Additional orders is unacceptable. Especially, last year the United States ports, the container terminals [were] almost full," he says. "It was very hard to put through the containers to the railroad. So, maybe, more than 10 percent volume growth will increase the cost for ports, for railways."
To keep up with demand, shipping companies have set off a building boom in the world's shipyards. But some critics warn the new ships are too big and will cause even more congestion at ports not equipped to handle all the cargo these super-sized vessels carry.
Even for the shipbuilders there is muted joy. South Korean builders, who dominate the industry, say their profit margins are dwindling because steel prices have surged more than 25 percent this year. The growth in shipping has been a mixed blessing for U.S. railroads - with some lines unable to move cargo off the docks fast enough.
"We are seeing that heavy congestion," says Mr. Saeki. "So railroads are very much congested within the United States and same thing in Canada, as well. So this is a challenge both [for] we carriers and customers."
The traffic jam could soon worsen, as North American imports peak in August when the bulk of the Christmas toys and other gifts arrive from Asian factories.
Toshio Sugimoto is the Far East representative for Burlington Northern Santa Fe, one of the United States' largest railroads. "It's not the peak season yet but already, you know, some congestion started in the West Coast," he says. "That's why I'm a little bit concerned about the congestion to be seen during the peak season."
Railroads are short of crews, as well as cars. As a result, the main rail yard in Los Angeles has become a giant parking lot with rail cars sitting for more than four days awaiting a locomotive.
Some industry analysts describe the situation as a bottleneck at best and a meltdown at worst. That is prompting shippers to route some cargo directly to the U.S. East Coast and then deliver the goods by truck. That option, however, is slower and costlier.
Mr. Sugimoto at Burlington Northern says that trend worries the rail industry. "We are not in favor of that diversion because in the long run we might lose cargo," he says. "During the slack season we want to get back those containers but already cargo has been diverted."
Some rail lines are racing to expand. Burlington Northern is spending $2 billion this year - adding nearly 350 locomotives and hiring 1,700 new employees, including 1,200 conductors. Competitor Union Pacific says it is hiring four thousand new employees this year.
Union Pacific also is canceling a trans-continental contract with United Parcel Service, under which cargo shipped from Los Angeles on Tuesday arrived in time for delivery in New York on Friday.
The coast-to-coast "bullet train" service forced other trains onto sidings, and that helped back cargo up all the way to Asia.