Local Organization Looks to Ports' Future
By 2027, more than 42.5 million containers will pass through the ports of Los Angeles and Long Beach, compared with 15.8 million containers in 2006.
This could be an economic boom for Southern California or just one big logistics nightmare, depending on how the region handles it.
“Trade and globalization are not going to stop,” said Mickey Kantor, former U.S. secretary of commerce and U.S. trade representative during the Clinton administration. “We need to shape it to our advantage. We can’t just have any kind of growth. We need to have sustainable growth.”
Kantor was monitoring a panel discussion sponsored by FuturePorts, a Southern California organization working on solutions to port growth, held at the Holiday Inn Torrance Gateway in Torrance, Calif. Other panel members at the Nov. 15 event were Paul Bingham, a Washington, D.C., economist with Global Insight Inc. who monitors the nation’s port activity for the retail industry, and John Husing, a Southern California economist who has done a number of studies on local port issues.
Since 2000, local port container traffic has been inching up about 10 percent a year. But port traffic this year has been relatively flat because of the weaker U.S. economy. Consumers are spending less because of higher gasoline prices and the depressed housing market.
“In container trade, the single biggest volume commodity in trans-Pacific traffic has been furniture,” Bingham said. “But if you’re not buying new houses, you’re not buying new furniture.”
But that will all change next year. Experts are predicting that the U.S. economy will turn around during the latter half of 2008. And the weak dollar, whose value has been tumbling for several years, making imports more expensive, will continue to slide until stabilizing by the end of 2008 or early 2009.
“Expect to see some rebound in trade growth as the U.S. economy comes back,” Bingham said.
But whether the local port complex can cope with future growth is a major concern for businesses that import their goods from overseas.
Many remember the 2004 port congestion problem, which had container vessels anchored offshore for up to one week while waiting for a berth at the local port complex. Scores of apparel importers lost millions of dollars when late deliveries prompted retailers to cancel their orders.
In 2005, many importers abandoned the local ports, opting to import goods through other West Coast ports such as those in Oakland, Calif., and Tacoma, Wash.
That could happen again if the ports don’t expand. They need to develop more-efficient docking procedures and devise a way to expand the highway infrastructure for trucks to take cargo to warehouses and distribution centers in the area.
Port growth is vital for job creation, Husing said. Husing pointed out that in 2005, 35,000 jobs were created by the logistics industry.
In the early 1990s, the United States used to be No. 2 in international trade, second to Germany. But with a flurry of free-trade agreements negotiated by the Clinton and Bush administrations, the United States has taken over the No. 1 spot, Kantor said.
“We are going to be the leader in international trade for years and years to come,” Kantor said. “But future growth at the ports has to be environmentally sensitive.” —Deborah Belgum
