The wait at the Los Angeles and Long Beach ports has gotten longer and longer, eroding their share of international trade.
The ports handled 39% of U.S. container imports in 2002; that fell to 32% by 2013, according to U.S. census data. They have lost business to competitors at a time when, overall, global trade is booming and imports are rising at all ports, including L.A. and Long Beach.
“The dominance of Southern California as the Asia gateway is facing a lot more competition,” said maritime consultant John Martin, who analyzed the trade data.
The loss in market share represented an estimated 12,300 direct and indirect California jobs in 2013, and more than $112 million in state and local tax revenue, according to Martin’s research.
The sudden growth of ship size has ports across the world scrambling to update infrastructure. Many are moving faster than L.A. and Long Beach, which are in the throes of multibillion-dollar expansions.
The bottlenecks at crucial commercial gateways have led to increased costs for U.S. retailers and manufacturers, many of which have resorted to stockpiling goods in warehouses or using expensive air freight to ensure timely delivery of goods.
After years of financial struggles, amplified by the global recession, ocean freight carriers have slashed costs and squabbled over their shares of the massive and growing international shipping industry.
That’s sparked a race to build megaships that can carry thousands more containers, capable of moving more cargo on less fuel. The average container ship being built now is nearly three times the size of the average a decade ago.
To fill enormous ships, ocean carriers are also making agreements to share vessels and pool cargo to save money. Sixteen shipping companies operating in four major corporate alliances now control about 80% of the world’s container shipping fleet, according to industry analyst Alphaliner.
That consolidation has caused immense headaches at port terminals, where longshoremen must sort through containers from multiple carriers before they can be fetched for truckers waiting to pick them up.
It’s a puzzle that Noel Hacegaba, chief commercial officer at the Port of Long Beach, refers to as the “Rubik’s cube.”
In the past, each shipping line typically arrived at a separate terminal with goods loaded in a particular order, for distribution to Chicago or New York or Kansas City. With the new alliances, containers from many different shipping lines are arriving at the same terminals — with their cargo stacked at random.
The cargo chaos is exacerbated by bureaucratic realities of updating port infrastructure — up to a decade of environmental impact studies, funding approval and permitting. Southern California ports’ eroding market share owes in part to stricter environmental regulations, experts said.
Emissions upgrades for port trucks, for instance, arrived sooner here than in other parts of the country.
“There’s no way L.A. and Long Beach could have foreseen enough five years ago to get this in place,” said Paul Bingham, an economist at Hackett Associates, a trade and transportation consulting group. “The industry can go to a shipyard, say ‘I want this new ship,’ and build them in 12 months.”
Now the ports are struggling to catch up. Among the biggest expansions: a $1.3-billion plan in Long Beach to replace the Gerald Desmond Bridge, which is too low for ships expected to be calling in the next five years; and a separate $1.3-billion expansion of two Long Beach port terminals that will create one of the most automated docks in the country.
The Port of Los Angeles is in the midst of a similar $510-million project to upgrade and automate one of its major terminals, known as TraPac.
“We’re the fastest, most direct route from Asia. But we can’t rely on geography alone,” Hacegaba said. “We have to demonstrate that our operations and our gateways are as efficient as they can be.”
The ports of New York and New Jersey have embarked on a billion-dollar-plus plan to raise the Bayonne Bridge connecting Staten Island and New Jersey. Ports from Baltimore to Savannah to Miami are spending hundreds of millions of dollars dredging deeper channels for larger vessels.
Some competitors are openly seeking to capitalize on the problems of Southern California ports. Advertisements for shipping to Prince Rupert in British Columbia tout “infrastructure solutions” at the “congestion-free” port.
The much-anticipated widening of the Panama Canal, expected next year, could pose another threat. It will allow for much larger ships to pass through the locks, opening the potential for transpacific cargo to bypass West Coast ports.
But even that project did not anticipate the rapid shift to mammoth vessels: The largest ships now calling at the Port of Long Beach won’t be able to fit through the newly widened Panama Canal.
Since dockworkers and shipping companies reached an agreement on a new labor contract in February, the two ports have made progress in reducing a severe backlog. But the true test will come as the ports enter the peak shipping season, said international trade economist Jock O’Connell.
http://www.latimes.com/business/la-fi-big-ships-ports-20150602-story.html#page=2