Wallenius Wilhelmsen Logistics (WWL) expects its vehicle-processing terminal at the port of Hueneme in southern California to see strong growth for exports from the US, led by Japanese manufacturers. The small terminal and port also expect that increasing container trade in major ports such as Los Angeles and Long Beach could once again push more volume in its direction.
Hueneme has seen a trend for more export activity through US ports against a drop in import activity, particularly of Asian brands, with manufacturers in the US including Toyota, Nissan and Honda, estimated to be exporting around 200,000 units each over the next few years as they look to leverage the weakness of the dollar versus the strength of the Japanese yen.
The terminal, managed by WWL’s Pacific Vehicle Processors (PVP) subsidiary, is split between portside storage yards and the nearby Oxnard processing facilities and has annual throughput capacity for 115,000 vehicles. But the terminal is currently recovering from a low of 30,000 handled in 2009, which recovered to 45,000 last year. For 2011 the company has conservatively budgeted to handle 46,000 vehicles, but expects a higher number from a range of customers including Mitsubishi, Honda Exports, Ford, Volvo and Jaguar Land Rover. According to Mike Wallace, senior general manager, West Coast at WWL PVP, the company is aiming to double that figure through export activity, including vehicles destined for China.
“Exports are a big growth potential for us over the next few years. We are seeing some of that now and we think those numbers could help us to double our current volume of vehicles over the next four years,” he told Automotive Logistics News.
WWL is expected to sign a new contract for exports from the US to China through Hueneme in the coming weeks and already moves vehicles there, including Honda’s Acura.
In addition, Mitsubishi, already an important customer for WWL PVP, has recently announced it is investing $45m at its Illinois plant the US for production of a new Outlander model, appropriately named as the company intends to ship at least 50% of its production overseas, which could potentially benefit WWL’s operation at Hueneme, according to Jerry Mahoney, director of business development at WWL Americas.
The Oxnard-Port Hueneme complex was the first facility that Wallenius Lines set up when it expanded its activity beyond pure ocean services in 1992, providing port processing for Volvo and Jaguar Land Rover. It joined BMW, which has had its own processing facility in Hueneme since 1988. Glovis also leases spaces for Hyundai-Kia vehicles from the US Navy, which has a base at Hueneme and owns a large share of the port.
Unlike major ports such as Long Beach or San Diego, the draw of a smaller port like Hueneme was that it offered specialised services and space that was not competing with containers with the port authority. According to Wallace and Mahoney, up until the financial crash ports such as Long Beach were so focused on containers that it actively discouraged some carmakers from expanding there.
Following the recession and the decrease in container handling, the finished vehicle trade was sought after again (WWL retains a facility in Long Beach for finished vehicles). However, with the economic recovery and renewed container trade competing for space with less lucrative automotive storage, facilities such as Hueneme could once again look more attractive to carmakers. American Honda, for example, has shifted considerable volume from San Diego to the much smaller port of Richmond, California. Subaru of America will join it there in June.
“If you were looking at making this sort of investment now it would be a lot more difficult to buy 65 acres in Southern California and build the facilities, so we’re in a pretty good position now,” said Wallace.
However, the terminal faces challenges that are representative of the wider vehicle logistics industry in North America. The shift from a push to pull manufacturing strategy amongst carmakers in North America has had mixed blessings for finished vehicle logistics providers operating port services in the country, particularly as lower inventories mean less revenue from port side vehicle processing centres.
Likewise, while the shift in balance from imports to exports offers opportunities for port operators trying to rebuild volumes after the recession, Wallace admitted that exports don’t offer the same revenue as imports for processors. Not only are exports generally stored for less time at ports, but they also require fewer maintenance services, accessorisation, paint shop and other PDI services, much of which would be carried out at destination ports. As a result, according to Wallace, Hueneme, as with many terminals, has had to restructure its business model and reduce staff to remain profitable.