Port Traffic May Grow By 9% This Year, Study Finds

By Muhammed El-Hasan STAFF WRITER

Growth at the twin ports of Los Angeles and Long Beach will keep going full throttle this year despite concerns about capacity and other issues, according to a study to be released today.

Container traffic at the two ports is expected to increase 9.2 percent to 17.2 million TEUs, or 20-foot equivalent units, says an international trade study by the Los Angeles County Economic Development Corp.

The growth in container traffic this year will be slightly slower than last year’s pace of 11 percent, the study says.

“Shippers continue to have confidence in the ability of the ports to handle the traffic,” the report says.

In 2006, two-way trade was valued at $329.4 billion through the twin ports, Los Angeles International Airport and several other points of international trade — collectively known as the Los Angeles Customs District.

That was a 12.1 percent increase over the previous year, easily allowing the customs district to retain its No. 1 national ranking. The New York Customs District was second at $295 billion in two-way trade.

Because of the nation’s trade deficit, many containers enter the ports loaded and leave empty. When counting only loaded containers, the Port of Los Angeles was the nation’s biggest gainer in traffic last year, recording a 17.5 percent increase to 5.72 million loaded TEUs, the study says.

The Port of Long Beach was second with a 9 percent increase to 4.79 million TEUs.

The Los Angeles-Long Beach port complex also retained its No. 5 worldwide ranking for total handled containers.

Americans’ appetite for im-ports from Asia is driving growth in local port traffic, said Eduardo J. Martinez, an economist who led the LAEDC trade study.

“As long as we’re running the trade deficit and Los Angeles remains the main entry point (to Asia), and Asian companies continue to excel in manufacturing, yes, it’s going to continue,” Martinez said of port traffic growth.

With container traffic at the twin ports expected to at least double in the next 15 to 20 years, concern will remain high over capacity, congestion and environmental effects, the report says.

The two main rail yards serving the twin ports, Hobart Yard and BNSF, are approaching their intended capacity. However, BNSF is developing a near-dock rail facility to move containers onto trains using the Alameda Corridor express freight rail lines. This new facility would likely reduce truck traffic on the Long Beach (710) Freeway and decrease pressure on the Hobart Yard, the study says.

Despite attempts to clean up the air, port pollution remains a major worry for the surrounding communities. This makes plans to increase port capacity a tricky political balancing act, Martinez said.

“It becomes a political process … that may drag out,” Martinez said. “The pressure in the room is not going away. It’s actually increasing. So it gives it a bit of urgency.”

Even without an increase in capacity, shippers from Asia have few options beyond the twin ports because other Western U.S. ports “don’t have the capacity,” Martinez said.

However, a long-term shortage of capacity at the Los Angeles and Long Beach harbors could prompt competing ports such as in Washington state to invest in greater capacity. Such investments would not be felt for at least five years, Martinez said.

The study also says direct international trade created 35,000 jobs last year in Los Angeles County and the four surrounding counties. That moved the annual average employment to 485,100 workers. Many jobs affiliated with international trade are considered high-wage positions.

More port traffic is welcome because of the extra jobs it brings, especially in the transportation sector, said Peter Peyton, secretary-treasurer of marine clerks local 63 of the International Longshore and Warehouse Union Local.

“I think it’s great,” said Peyton, who represents 1,400 marine clerks who track cargo at the twin ports. “The transportation sector is filling the jobs lost in manufacturing because it’s the fastest growing sector.”

Another major issue facing the ports is the impending July 2008 expiration of a union contract between shippers and longshore workers at Western ports.

Shippers have proposed beginning negotiations this summer to try to avoid a repeat of the 2002 lockout that created a huge backlog at the ports.

When to start negotiations will be discussed at the ILWU’s caucus in San Francisco this week, Peyton said. The union may have a reason to delay start of negotiations, Martinez said.

“In regards to the union’s negotiating tactic, it might be in their advantage to delay the negotiations to improve their position,” Martinez said.

Shippers concerned about a possible shutdown of the West Coast ports have increased their use of the Panama and Suez canals to reach the East Coast.

As the contract expiration nears, “some shippers have begun to hedge their positions,” the study says.

muhammed.el-hasan@dailybreeze.com

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