California Ports

June 15, 2009

Global recession batters California’s ports

California’s ports are getting quieter and the state’s huge export slump is getting worse. According to a report in the Sacramento Bee, exports from California fell 25.5 percent in April from a year earlier, figures compiled Wednesday by Sacramento trade consultant Jock O’Connel reveal. The shipments from California’s ports, totaling $9.25 billion, represent the worst April in four years. Earlier this year, exports were falling at about a 20 percent rate. O’Connell said the new figures show a turnaround is a ways off despite signs on the national level that the economy might bottom out soon. O’Connell told the Bee that the export decline was widespread. The volume of cargo leaving the ports of Los Angeles and Long Beach was off 18 percent. Exports from San Francisco International Airport fell 34 percent. For the state, April marked the sixth straight month of declining exports. O’Connell added that imports at California’s ports fell 28.5 percent, demonstrating the global spread of the recession.

Filed under California Economy, California Ports by

September 2, 2008

Mexico moving forward with massive port at Punta Colonet

Mexico has open the bidding process for the huge new port complex being planned for Punta Colonet – currently a village about 150 miles south of Tijuana. This project is being designed specifically to compete with California ports, and the economic impact could be huge. The project bid is being structured as “joint port-and-rail project” and we don’t know the route of that rail road yet – it could point straight toward Texas and bypass California completely. As reported in the Los Angelest Times, however, its future of this project is anything but ensured:

Mexico’s government is setting sail with the largest infrastructure project in the nation’s history, a $4-billion seaport that it hopes will one day rival those of Los Angeles and Long Beach. President Felipe Calderon is scheduled to travel to northern Baja California today to open bidding on a development that his administration hopes will catapult Mexico into a major player in North
American logistics.

Plans call for the construction of a massive port in the tiny coastal village of Punta Colonet, about 150 miles south of Tijuana, along with new rail lines to whisk Asian-made goods north to the United States. Mexico’s aim is to snatch some Pacific cargo traffic from Southern California’s ports, whose growth is constrained by urban development and environmental concerns.

Punta Colonet is expected to have a capacity of 2 million shipping containers annually when it opens in 2014, Mexico’s transportation secretariat told The Times But officials envision it ultimately handling five times that amount. Last year, the ports of L.A. and Long Beach handled 15.7 million containers combined. The massive development is to be privately funded, with the first phase estimated to cost $4 billion to $5 billion. The government is expected to award the 45-year concession in 2009. A number of major players are expected to vie for the project, including Mexican billionaire Carlos Slim Helu, the world’s second-richest man. Slim’s infrastructure company, known as Ideal, has teamed with Mexican mining and railroad giant Grupo Mexico and New Jersey-based terminal operator Ports America Group to make a run at the deal. “We’ve spent a lot of years working on this,” said Miguel Favela, head of Mexican operations for Ports America. “It’s going to make Mexico . . . much more competitive.”

About 30 million shipping containers crossed the Pacific Ocean last year, a flow that increased about 10% annually in the last decade. A weak U.S. economy has slowed the trade, but experts predict it will rebound. With shippers increasingly worried about congestion at L.A.-Long Beach, Punta Colonet has emerged as an attractive alternative. It’s close to the United States. It possesses a wide, natural harbor. And it’s in a lightly populated area offering room for expansion. When Calderon visits the dusty hamlet of about 2,500 people today, he is expected to talk about the big changes in store. The village will need extensive upgrades to its roads, housing, electrical grid and water supply. State and local officials are planning for a city of about 200,000 to spring up around the port.

The changes envisioned are alarming environmentalists, who worry about the potential destruction of the area’s plants and wildlife. But the farmers who scratch out a living there are thrilled at the prospect. “What we need is employment for our kids,” said Jesus Lara, representative of several peasant landowner groups that are eager to sell. “Everyone is excited. Having the president come to your town is like winning the Lotto.”

But whether Punta Colonet turns out to be lucrative for Mexico won’t be known for years. Competitors up and down the Pacific coast are in the midst of major upgrades. Panama has begun a $5.3-billion expansion of its landmark canal. Canada’s Prince Rupert port in British Columbia began speeding containers to the American heartland by rail last year and is planning a major expansion. Little of the cargo bound for Punta Colonet will stay in Mexico, making the port vulnerable to the whims of shippers, who can choose other routes to the U.S.  “Nothing is guaranteed,” said Asaf Ashar, research professor with the National Ports and Waterways Institute in Washington. “It’s a big risk.”

Building a seaport from scratch would be difficult enough. But the overland transportation piece is likely to make or break Punta Colonet. The deal is being structured as a joint port-and-rail project,
requiring terminal operators, railroads and construction companies to team up in consortia to win the bid. The railroad’s ultimate route and U.S. crossing points will depend on which railway operator is chosen and how it manages to link up with existing rail networks on both sides of the border.
Union Pacific Corp. of Omaha and Fort Worth-based BNSF Railway Co. control the U.S. side of the tracks at most of the key U.S.-Mexico border crossings. Striking a deal with one of those companies to get the cargo to the American side will be crucial, said Paul Bingham, managing director of the global trade and transportation practice for Global Insight, a Massachusetts-based consulting firm.

“They have the ability to essentially choke off that port,” Bingham said.  BNSF spokesman Patrick Hiatte said Wednesday that the company was “very interested” in the Punta Colonet project. He declined to say with whom the firm might collaborate to make a bid. Union Pacific could not be reached for comment. The company earlier had teamed with Hong Kong-based Hutchison Port Holdings to make a run at the project, but that alliance dissolved last year.

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May 10, 2008

Long Beach customs agents seize 18,560 pairs of fake shoes

U.S. Customs and Border Protection officers discovered 18,560 pairs of fake Nike sneakers inside two shipping containers that arrived from China, Associated Press has reported. The ship’s manifest listed the containers as holding drainage pipeline fittings, but when officers at the Port of Long Beach opened them they found the shoes instead. “The average consumer who walks into a store I think would be fooled by them,” said Bonnie Lemert, U.S. Customs and Border Protection acting port director for the Los Angeles/Long Beach Seaport. So far this year, the customs agency has seized at least eight containers of footwear, mostly the Nike brand, said the federal agency’s spokesman Mike Fleming. Last year, agents seized $20.6 million dollars of counterfeit merchandise, and 80 percent of the fakes come from China, authorities said.

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March 31, 2008

West Coast Ports losing business to East Coast Ports

Remember the shipping holiday seasons in 2004/2005? So many imported goods shipments from Asia descended on California Ports that one observer at the Port of Long Beach said “it looks like the invasion of Normandy”. How things have changed, according to a variety of industry reports it appears that port traffic, and also congestion, are way down at California Ports. The reasons include a slowing economy and sinking dollar, more productivity at the Ports and apparently a loss of business to East Coast Ports. As reported in Supply Chain Digest there seems to be serious cause for concern:

In 2005, severe capacity constraints caused many importers to shift volumes from Long Beach/LA and other West coast ports in favor of places like Houston and a variety of East coast ports to gain more consistency in transit times. Now, slowing import growth combined with productivity improvements means West coast congestion issues are long gone – but by most reports, container volumes continue to move eastward for a new set of reasons.

Larry Gross, President of Gross Transportation Consulting, said recently that significant volumes of imports that previously came into the United States through West coast ports and then moved East through rail/intermodal are now coming into the U.S. via the East coast ports. “If you look at region-to-region intermodal flows, you will see that there are certain region-to-region flows that have dramatically dropped,” Gross recently said, as the containers come directly into East coast ports.

Similarly, according to a report last November by the American Association of Port Authorities, the West Coast’s share of Asian imports fell to 58 percent in 2005 from 86 percent in 1999, while the Panama Canal’s share climbed to 40 percent from 11 percent – a stunning shift in volumes. Why? Two primary factors:

* Rising fees that impact total delivered cost comparisons versus east coast ports
* Continued capacity constraints on the rail side to move containers inland

Traditionally, it has been cheaper to bring containers into west coast ports, and move them via rail to distribution centers in the central and eastern regions of the US, where they are distributed to the majority of the US population that lives east of the Mississippi.

But seemingly never-ending proposals for new container fees in California to fund infrastructure improvements and environmental impact mitigation are causing real concern for importers. For example, carriers that deliver cargo to the ports of Long Beach and Los Angeles are facing a combination of new fees that could amount to as much as $100 per fully loaded TEU.

“The cost of these fees is more than we pay to load or unload a container at the San Pedro (Los Angles) ports,” Edward DeNike, president of SSA Containers, recently said during a presentation at the Trans-Pacific Maritime Conference. “This is Southern California and we know that Northern California will follow and the Pacific Northwest won’t be far behind.” He said that his company recently lost handling business of 100,000 containers a year from one customer that shifted import volumes from Seattle to the East Coast.

As an example of the mounting fees, beginning June 1, 2008, a new $35 charge will be placed on every loaded 20-foot equivalent cargo container entering or leaving the Long Beach or LA ports by truck. When the new fees where approved, Long Beach Mayor Bob Foster commented that the new tariffs were “an important milestone for our community. It puts the costs for cleaner air where it belongs — on the prices of goods sold.” Well, that’s the way to attract more port business. As a result of these new fees, which East coast ports haven’t matched, West coast ports become increasing less cost competitive for containers that will ultimately move eastward.

Rail Capacity also an Issue. While West coast port capacity and throughput has definitely not been an issue of late, the rail lines leaving the West coast have not been able to expand their capacities at the same rates. As a result, port efficiency gains have not always results in total transit cycle time improvements. In Southern California, the challenge is getting long-haul freight out of a vast urban area. In the Northwest and Western Canada, the hurdle is dealing with the need to build more tracks and ensure reliable service through regions of heavy weather.

Planned improvements in the Panama Canal to increase throughput and the size of ships that can be handled may accelerate this trend. US West coast ports are being threatened by other change as well – the expansion of Canada’s West coast Prince Rupert port, and plans by Asian interests to invest in ports in Mexico that would move goods by rail to the rest of the U.S., bypassing West Coast urban traffic, are also getting increased attention from importers.

Filed under California Economy, California Ports by

January 2, 2008

California Ports trying to get trucking companies to hire independent drivers

California Ports are trying to encourage trucking companies to hire independent drivers as a way to cut pollution, but the trucking companies say they cannot afford it. As reported in Inside Bay Area:

At the Port of Oakland, as well as ports in Los Angeles and Long Beach, a cornerstone of that effort entails persuading trucking companies to hire drivers — rather than continue to use them as independent contractors. Port officials, as well as several community and environmental groups, say this plan will cut pollution because trucking companies can afford to run cleaner trucks than the independent drivers can.

The trucking companies, however, say they cannot shoulder the additional economic burdens of hiring drivers and acquiring trucks. Nevertheless, trucking companies are being pushed to embrace some measures to improve drivers’ conditions and help reduce pollution. More than 50 percent of the truck drivers who serve California ports earn no more than $30,000 a year after expenses, according to a report by the East Bay Alliance for a Sustainable Economy and the Coalition for Clean and Safe Ports. On such wages, drivers cannot buy and maintain the most fuel-efficient rigs, the organizations argue.

Port of Oakland officials presented a proposal to its board June 7 that would encourage trucking companies to hire drivers and assume ownership and maintenance of hauling equipment. Such a plan would reduce pollution from poorly maintained old trucks and employers would provide better wages for the drivers, officials said…

New trucks can cost upward of $120,000. Used ones cost what the market will bear, depending, like automobiles, on make, year and condition. Mohammed Asif bought his last truck used in 2006 for $6,000. But Vereket Waldegorgis, another independent, spent $20,000 for his second-hand equipment. Several trucking company owners, such as Jerry Phillips of IMPACT Transload and Rail, based in Richmond, said drivers want to remain independent.

But this belief does not jibe with the petition 1,250 of the port’s 1,500 drivers signed, saying they would prefer to be employed by trucking companies. The Teamsters union and community action group Change to Win, which organized the petition drive, presented the document to the port Board of Commissioners in July.

The Port of Oakland has been waiting to implement its clean truck program until officials see how similar plans work at the ports of Long Beach and Los Angeles… Meanwhile, the International Brotherhood of Teamsters — which has tried for years to unionize port drivers — awaits the day when independent contractors will become employees. Chuck Mack, director of ports for the Teamsters union, said, “We’re comfortable we’re going to change the model in Oakland and Los Angeles-Long Beach.”

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September 27, 2007

Speculation on the impact of a dirty bomb on Los Angeles Ports

The Center for Risk and Economic Analysis of Terrorism Events at the University of Southern California recently speculated on the impact of a radiological dispersal device- i.e. a “dirty bomb” on the ports of Los Angeles and Long Beach, CA. Their conclusion: such an attack would likely result in few deaths, but there would be severe economic and psychological consequences resulting in losses of hundreds of billions of dollars, and the incident would create a critical missing link in the worldwide supply chain as the port is closed. More of this cheerful report can be found at this link:

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May 2, 2007

LAEDC releases International Trade Report

The Los Angeles County Economic Development Corp. has released its annual International Trade Trends and Impacts report. As is usual for this otherwise reputable organization, they have lumped all imports and exports onto one category with frequent references to what that they call “the total value of two-way international trade”. It isn’t until the discussion of individual trade partners is there any mention at all about the huge trade deficits with these countries, and we can only assume that Los Angeles Ports must be shipping a huge number of empty shipping containers back to Asia. With China, for example, there is a regional trade deficit of 83 billion dollars- a nearly 5 to 1 import to export ratio with Southern California. In spite of this, the LAEDC did not even mention the stunning difference between imports and exports in their list of “challenges” facing the industry.

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April 11, 2007

Trade rift with China over paper imports could hurt Southern California

At least that is what the Long Beach Press telegram thinks:

A growing U.S.-China trade rift over coated paper exports to America has direct implications for Southern California seaports, where much of the paper is shipped, the Long Beach Press-Telegram reports. Exporters of Chinese coated paper, accused by U.S. manufacturers of receiving unfair subsidies in their homeland, are now facing significant duties on exports to the United States following a March 30 ruling by the Department of Commerce. The decision, which affects the rapidly increasing volumes of coated free sheet paper moving through the ports of Long Beach-Los Angeles, comes in the wake of an anti-dumping investigation by the Commerce Department. The investigation found that Chinese paper producers were receiving unfair government subsidies averaging 18.16 percent, artificially pushing down prices on the world market and undercutting American manufacturers. “The China of today is not the China of years ago,” said Commerce Secretary Carlos Gutierrez, who visited the Port of Long Beach in January to discuss U.S. efforts to level the trade imbalance with China. “Just as China has evolved, so has the range of our tools to make sure Americans are treated fairly.”

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March 29, 2007

More managable growth predicted for Long Beach-Los Angeles port complex

“International trade and retail experts forecast smooth sailing for cargo moving through the Long Beach-Los Angeles port complex this year, but potentially disruptive congestion problems may be looming. Following tremendous volume increases in 2005 and 2006, retailers and shippers are reporting slower growth this year as the national economy, dragged by a slumping housing market, begins to cool. Still, it’s expected that the L.B.-L.A. seaport, the nation’s largest, will efficiently handle between 8 and 10 percent more volume than last year, according to experts who spoke Tuesday at the third annual Pulse of the Ports economic forecast, hosted by the Port of Long Beach. ‘We do not expect a lot of excitement in 2007, thank God,’ said Bill Rooney, a Hanjin Shipping executive and conference speaker. ‘We see the excitement coming a bit down the road’… To read the full report, visit”

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March 22, 2007

‘Inland Port’ proposed for Antelope Valley

“Seeking a solution to L.A’s congested freeways, a county official has proposed creating an “inland port” in the Antelope Valley where big rigs would pick up goods transported there by rail instead of driving to seaside ports. The idea by Los Angeles County Supervisor Michael Antonovich aims to shift a significant chunk of the 22,000 truck trips made each day in and out of the ports of Long Beach and Los Angeles to the county’s rural outskirts on the 5, 14 and 15 freeways. Goods would be hauled from the L.A. and Long Beach ports on existing train tracks to the Antelope Valley, where they would be loaded onto trucks bound for markets nationwide. ‘An inland port would reduce truck-related congestion and pollution throughout the county,’ Antonovich said. The Metropolitan Transportation Authority board, where Antonovich also has a seat, is exploring the inland transfer station along with other plans to move products through the county’s highways, railways and ports as part of a statewide program to increase commerce while creating as little pollution as possible.”

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March 21, 2007

Hawaii opposes proposed California container tax

“The Hawaii state legislature is considering a resolution asking the California state legislature to find a way to improve port infrastructure without taxing Hawaii shippers. California’s legislature is considering a new tax on shipping containers that would cost an estimated $34 million a year to Hawaii shippers. ‘This bill, if passed, will have a major negative impact on Hawaii’s economy, the maritime industry and raise the cost of living for Hawaii’s people,’ said Jim Tollefson, president of the Chamber of Commerce of Hawaii. More than 80 percent of goods consumed in Hawaii are produced elsewhere and shipped to the islands, and 90 percent of those are shipped through the California ports of Oakland and Long Beach on the ships of Matson Navigation Co., Horizon Lines and Pasha Hawaii Transport.”

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March 14, 2007

Oakland Mayor backs out of China trip

Unlike other politicians in California, Oakland Mayor Ron Dellums is concerned about the possibility of a conflict of interest and will not travel to China as part of a trade mission. According to the Oakland Tribune:

The mayor wanted the trip to take a holistic approach, with Chinese officials presented with a united front of federal, state and local officials working to ensure the Port of Oakland and the Bay Area benefits from the growth of China’s economy, said spokeswoman Karen Stevenson. The mayor’s decision followed the announcement Friday that U.S. Rep. Barbara Lee, D-Oakland, would not be able to go on the trip. “The mayor envisioned a multijurisdictional collaboration that wasn’t coming together,” Stevenson said. Jose Duenas, president of the Bay Area World Trade Center, organizer of the trip, said the trade mission would be rescheduled. Government watchdog groups said it was inappropriate for the trade group to pay the mayor’s way, because the trip would offer tremendous access and could make Dellums more likely to back their proposals.

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March 9, 2007

Texas company wants to build floating LNG plant off Long Beach

“A small San Antonio oil and gas company has plans to jump into a big business — building a liquefied natural gas facility off the coast of Southern California. Esperanza Energy LLC, a subsidiary of Tidelands Oil & Gas of San Antonio, said Wednesday that it plans to file applications with state and federal agencies to build a floating LNG plant about 15 miles off the coast of Long Beach, Calif.
‘People say you can’t hope to build an LNP facility in California’, said Esperanza Vice President Terry Mitchell. ‘I’m out to prove them wrong’. “

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March 7, 2007

Port of Long Beach losing money on oil operations

“Despite high oil prices, strong demand and surging production levels, the Port of Long Beach’s oil budget may end the fiscal year nearly $5 million in the red. Drilling costs, coupled with the enormous expense of cleaning up an old Pier A oil waste disposal site, will result in a net loss for the year if prices for local crude continue hovering around $50 per barrel. Last year, when local crude sold as high as $67 per barrel, the harbor’s oil operations produced profits of more than $15 million. This year, losses are attributed primarily to one-time costs – exceeding $20 million – which include the cleanup of a former oil disposal site known as the ‘bug farm’. The 10-acre farm, shut down more than a year ago, was a series of dark mud-like pits on Pier A where billions of tiny microbes devoured oil production by-products. “

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California Air Quality Executive blasts EPA

“The U.S. Environmental Protection Agency on Friday unveiled proposals to slash diesel soot from freight trains and marine vessels by 90% by 2030, winning guarded praise from environmentalists, but a scathing rebuke from Southern California’s top air quality regulator… South Coast Air Quality Management District Executive Officer Barry Wallerstein said the region was “being thrown table scraps” with rules designed to benefit industry, which will allow thousands of Californians to continue to die prematurely for decades. Greater Los Angeles is exposed to pollution from diesel engines more than anywhere in the nation, with 40% of all goods shipped to the U.S. funneled through the ports of Los Angeles and Long Beach on diesel-powered ships and trains. The air that Southern Californians breathe contains more than half of all the diesel particulate emitted in the U.S. each year.”

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March 5, 2007

Chinese Billionaire may control Baja Port

“The Chinese company Hutchison Whampoa, owned by Chinese billionaire Li Ka Shing, controls 35 major ports in the world, including the four most important ports in Mexico. Hutchison is about to build a brand new port at Punta Colonet, a Baja California cove located just two hours south of the US border. Hutchison Ports Holding, part of the Hutchison Whampoa group, runs 35 ports including the Bahamas, Buenos Aires, and two in the Panama Canal. And again, it is owned by Li Ka Shing, China’s most influential billionaire who is known as ‘The Superman of the Orient’… Tijuana politician Jaime Martinez Veloz has alleged that Hutchison has a track record of power mongering and insider maneuvering in Mexico. Martinez said that Hutchison obtained the concession to operate the Lazaro Cardenas port using a method that Martinez described as ‘a vile swamp of transnational, governmental and business corruption.’ He added, ‘the favoritism and partiality of the Mexican port authorities towards the oriental consortium Hutchison has inexplicable reasons, but one day they will be known’. “

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Mexican official promotes benefits of Baja port project

“The mega container port and rail project planned 150 miles south of San Diego at Baja California’s Punta Colonet will benefit the United States as well as Mexico, a top Mexican federal official said yesterday. ‘This is a very important project. It’s a project that should be taken in the interest of both nations. Even though it’s on Mexican soil, the United States should be interested in this project,’ said Manuel Rodríguez Arregui, the Mexican subsecretary of transportation overseeing the project… Plans call for the Colonet port to be as large as the Los Angeles and Long Beach facilities combined. The new port would occupy nearly 7,000 acres”.

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The Port of Los Angeles to fund first Hybrid Tug Boat

“A new hybrid tug boat proposed by Seattle-based Foss Maritime Company, and funded in part by the Port of Los Angeles, will be substantially less polluting, more fuel efficient and even quieter than today’s modern tug boats. Through a Technology Advancement Program (TAP) established as part of the San Pedro Bay Ports Clean Air Action Plan, the Port of Los Angeles will co-fund the ‘green’ tug initiative, contributing $850,000. The Technology Advancement Program seeks to fund projects aimed at developing less polluting technology for harbor craft operating within the L.A.-Long Beach port complex through prototype projects like the Foss hybrid tug.”

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February 18, 2007

L.A. and Long Beach Ports Issue RFP for LNG Trucks

“The San Pedro Bay ports of Los Angeles and Long Beach — the nation’s two leading containerports — have issued a joint Request for Proposals (RFP) to seek qualified applicants for a new Liquefied Natural Gas (LNG) Truck Program. All vehicles funded under the LNG Truck Program are required to have electronic monitoring units with global positioning system (GPS) capability installed prior to delivery of the vehicle, and verification must be provided to the Port of Los Angeles prior to releasing the vehicle. The effort is a component of the milestone San Pedro Bay Ports Clean Air Action Plan approved last November.”

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