Surviving the China Rip Tide

Surface freight from Asia to the west coast of North America and to Europe is growing at a rapid—by historical standards, an explosive—rate, while port and surface-transport capacities are not. North American ports and rail systems are beginning to choke, and delays and uncertainties are increasing. Freight demand on the North American west coast has been growing at a rate equivalent to one Port of Vancouver per year, and a rapid expansion of port and rail capacity will be difficult given political pressures and formidable environmental resistance. A similar situation exists in Europe. Although the problem is not as acute there, plans are ostensibly in place to add significant port capacity over the next six to eight years. Nevertheless, the conditions we describe in this report are going to get far worse before they start getting better.

The ports and rail systems of the North American west coast are implementing changes, but these are not likely to meet the growing demand, for many reasons. The most significant is that each of the North American participants in the China-anchored supply chains has a narrow view of its role and a limited notion of the end-to-end potential for improvement. The changes being made or contemplated reflect this narrow focus. They are incremental, and their effects will be swept aside by the bigger forces of the China rip tide.