Ports React to Wake-Up Call

Posted 15 years ago

For many years, cargo growth came easily to the nation’s largest port complex, Los Angeles-Long Beach, thanks to an unparalled network of marine terminals, distribution facilities, and intermodal rail capabilities. It started in the 1990’s with the massive shift of manufacturing to Asia and climbed to an annual average of 11% from 1995 to 2006. The peak occurred in 2006 with containerized imports at 8,171,709 loaded TEUs’, nearly doubled the total from 1999.

However, that growth came to a stop after 2006 and the ports are taking a big share of the recent downturn with February’s container volume plunging 40% in Long Beach and 32% in Los Angeles.

Not only is the bad economy to blame but also a myriad of other factors that when combined, has greatly contributed to the diversion of cargo from Long Beach-Los Angeles. Worth mentioning are:

• Increasing port costs due to cargo fees attached to environmental programs (i.e, clean-truck regulations), administrative costs, and possible unionization of harbor trucking. The ports clean-truck regulations are already involved in litigation on two fronts
• Big retailers building import, near-port distribution centers and warehouses at multiple ports
• Ports in the Pacific Northwest, Mexico, Gulf and Atlantic coasts emerging as alternate intermodal gateways. Most notably is Canada’s Port of Prince Rupert, the main contender for the Midwest traffic.
• Unfriendly business climate stemming from ignoring shippers views when developing policy initiatives

Not to mention the significant effect that the expansion of the Panama Canal will have when its ready in 2014. Nonetheless, the Southern California ports have gotten the wake-up call and are determined to do something about it. Following a meeting between executives of the Port of Long Beach and of the Waterfront Coalition in March, attendees of the annual Pulse of the Ports conference in April heard how the ports are reducing their charges, postponing cargo fees, negotiating pricing of intermodal services and improving communication with shippers and cargo interests. To be seen is the success of the latter because it will take more than just economical measures to prevent further diversion of cargo. “It’s not about the money,” according to Robin Lanier, executive director of the Waterfront Coalition, a shippers organization. Its about changing the uncooperative business attitude and streamlining rules and processes cargo interests face in Southern California.