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Mobile’s port is on record-setting pace – but a rail strike looms

MOBILE, Ala. (WALA) – The booming Port of Mobile’s container facility is on a record-setting pace, but a major freight rail strike that could be on the horizon threatens to impact operations.

The current contract extension is set to expire at midnight Thursday. If unions representing engineers and conductors do go on strike, it could slow down the movement of products from ships to factories and stores. Much would depend on how long the work stoppage lasts, according to Alabama Port Authority Director and Chief Executive Officer John Driscoll.

“It would be impactful, obviously, because rail – we have nine railroads that touch the port,” Driscoll told FOX10 News.

That includes five Class I rail lines that would be directly affected by a strike, he added.

Driscoll said the port has been watching labor negotiations and making alternative plans. Shipping containers that now leave the port on rail cars could be shipped on trucks, he said. He added that some other products could be diverged to barges.

But many other products could stack up at the port if a strike dragged on a long time, Driscoll said.

“Some of it won’t be able to move until the rails are back online,” he said. “So there’s only so much you can do from a contingency (standpoint).”

The potential strike comes at a time of rapid growth at the port. Its container terminal, which opened in 2008, is one of the newer and more modern facilities in the country. Containers still account for only about 20 percent of the overall business at the port, but it is an increasingly popular way to move cargo. Instead of workers unloading ships and putting pallets onto trucks, cranes can lift packed containers and place them directly on to rail cars for a swifter turnaround.

APM Terminals, which manages the container facility, reported that it is running 10 percent ahead of last year’s pace. Ports measure volume in Twenty Foot Equivalent Units, or TEUs. From January through August, the company moved 264,687 TEUs. At that pace, it will break a half-million TEUs six weeks sooner than it did last year.

Rail traffic from the port was up 125 percent in August compared with last year. And refrigerated cargo was up almost 16 percent. August was the eighth straight month where intermodal rail volume doubled or tripled.

This comes on top of July’s performance, which was the busiest month for containerized cargo in the history of the terminal.

The increase mirrors growth in container shipping at ports all along the Gulf Coast and Eastern Seaboard. But Driscoll said Mobile has a competitive advantage because of APM Terminals’ efficiency. The facility has among the best moves per hour in the country.

“I think we’ve outpaced some of the growth compared to some of the other locations on a percentage-term basis,” he said. “The Port of Mobile has been the fastest-growing port in the last five years.”

The port currently serves all 67 Alabama counties, exporting products like lumber, wood pulp, poultry and components for factories like the state’s automotive plans, and importing a wide variety of retail products. Driscoll said the division is fairly balanced, with imports typically accounting for about 55 percent to 60 percent of the activity.

The port is laying the groundwork for even more traffic. A project begun last year to widen and deepen the channel – which will accommodate bigger vessels – is scheduled to be completed in early 2025. A planned expansion that will increase container capacity by 50 percent is slated to be finished in 2025, as well.

The state also plans to construct so-called inland ports that will help to get products to market faster. The first one will be built in Montgomery County in late 2004 or early 2005. Driscoll said it will help get parts to the Hyundai plant. A second facility, which is not yet funded, would go in northern Alabama and help reach places like Chicago faster. The intermodal facilities will result in less cargo on trucks along Interstate 65 and more on trains, he said.

Margaret Kidd, a professor and program director of supply chain and logistics technology at the University of Houston, said Mobile is one of a number of ports along the Gulf Coast and Eastern Seaboard that are luring business away from overcrowded ports on the West Coast. She said even before the COVID-19 pandemic, California ports were seeing a decline in business. That has accelerated, she said.

“You can’t have 40 percent of all containers coming in from Asia in LA-Long Beach,” she said.

Rearranging supply chains do not happen overnight, though. Driscoll pointed to a major retailer customer in Chicago that recently began shipping to the Port of Mobile.

“They first saw they were running into some problems associated with getting from West Coast to the central part of the United States,” he said. “And they started talking to APMT probably a year before they made that shift.”

Kidd said Mobile is not alone in upgrading port facilities. She noted that Houston this year launched a billion-dollar project to widen the ship channel there.

“So, certainly in a port like Mobile, it’s not a surprise that there would be an infrastructure investment,” she said.

The growth of the port delivers economic benefits throughout the economy, Driscoll said. He referenced a 2019 study indicating that the port is responsible for direct and indirect employment of 162,000 statewide. That includes about 40,000 in Mobile and Baldwin counties.

Kidd said that tends to be the case in other port cities, as well.

“Ports are economic engines for their communities and, you know, there’s a multiplier effect that occurs,” she said. “Trade is people. Trade is jobs. Trade is prosperity for a region.”

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