The Conversation: Is it sunset for state's seaports?
- Published: Sunday, Jan. 29, 2012Container traffic through the Port of Oakland more than doubled from 1990 to 2007, and related jobs soared. Some in the maritime industry say those jobs are now threatened as the Panama Canal expands its capacity.The Port of Oakland can handle the largest container ships too big to pass through the new locks at the Panama Canal a major advantage as long as land links to U.S. markets can handle the volume.A ship sails near an area of the Panama Canal under construction during an expansion project that will double capacity by 2014, adding new sets of locks that will accommodate much larger vessels.Cranes crowd the landscape near Cocoli as part of the Panama Canal expansion project. Panama has made no secret of its ambition to position itself as an intermodal hub for Latin American trade.___________________________________________JOIN THE CONVERSATION: Should California spend more money on infrastructure for ports and expedite completion? Leave a comment at the end of this article.
You'll likely be hearing a lot of talk about the Panama Canal over the next couple of years.
First opened on Aug. 15, 1914, the canal linking the Pacific with the Atlantic will mark its centennial in two years. Yet, for some Californians, the anniversary won't be an occasion for celebration.
That's because the canal's capacity is being doubled with the addition of a new set of locks designed to accommodate ships of a size never envisioned a century ago. And it's that $5.25 billion project, due for completion by the end of 2014, which is being portrayed not as a laudable engineering feat but rather as a threat to "hundreds of thousands" of California jobs.
At least that's the apocalyptic-sounding message of a "Beat the Canal" video recently produced by a Los Angeles-based coalition of maritime industry representatives, government officials and business leaders calling themselves the Jobs 1st Alliance, http://www.beatthecanal.com.
The group's contention: that a bigger ditch in Panama will prompt a massive diversion of transpacific shipping from California's maritime gateways to seaports along the Gulf of Mexico and the Atlantic Seaboard, thereby endangering the "entire goods movement industry in California."
So how likely is it that an expanded canal will prompt shippers to divert a substantial volume of trade from California's seaports, perhaps reducing traffic by as much as 25 percent as one frequently cited worst-case scenario suggests?
Or is all the hollering just an effort to stampede lawmakers into expediting a number of infrastructure improvement projects currently mired in red tape or litigation?
A little background information might help provide a better appreciation of what's going on.
Until the mid-1980s, the majority of America's maritime trade went through its East Coast ports. But with the emergence of Japan followed by South Korea, Taiwan and ultimately China, as major trading partners, the balance shifted decisively to the West Coast.
Between 1990 and 2007, when U.S. maritime trade peaked as the recession took hold, there was a fourfold increase in containerized trade through the ports of Los Angeles and Long Beach. In the process, the two San Pedro Bay ports became the nation's busiest maritime gateway. Container traffic through the Port of Oakland, meanwhile, more than doubled.
Not surprisingly, the number of jobs directly and indirectly associated with port activities soared.
According to the Los Angeles Economic Development Corp., trade-related employment in its five-county region exceeds 500,000, while the Port of Oakland estimates that its operations support some 73,000 jobs in Northern California. Notwithstanding its imposing presence alongside the Bay Bridge, the Port of Oakland handles about one-sixth as many containers as pass through the San Pedro Bay ports.
These jobs also represent some of the more egalitarian employment opportunities available in an economy afflicted with a shrinking middle class. Indeed, for the 40 percent of Californians over the age of 25 whose résumés feature no more than a high school education, employment in the logistics sector remains one of the few avenues to a middle-class lifestyle.
Most of the merchandise imported through West Coast ports falls into the category of "discretionary cargo," shipments that are not destined for the region most directly served by a port.
Research conducted by UC Berkeley's Robert Leachman for the Southern California Association of Governments found that fewer than 20 percent of the goods imported through the ports of Los Angeles and Long Beach are actually destined for markets in Southern California. The rest are transported as expeditiously as possible by rail or truck to other areas of North America.
In theory, therefore, the vast majority of the cargo entering those two ports is up for grabs.
If conditions at these ports are not to shippers' liking, or if the charges for moving containers through the ports are deemed too high, shippers have the discretion of routing imported goods through other ports of entry, thereby imperiling jobs and reducing the revenue streams that finance port operations.
So what is the impact of the larger Panama Canal likely to be on California's ports?
Frankly, it's not entirely clear.
That a more capacious canal will have some impact is indisputable. Opening a new channel through which goods can flow will certainly draw some business away from California's ports, especially when ports on the other side of the canal are aggressively seeking to bolster their cargo-handling capacities and when an increasingly large share of America's population and industry has been migrating into the states of the old Confederacy.
But ships move through canals in both directions, and so the impact of a new set of locks in Panama cannot be measured solely in terms of lost cargo. Just as the expanded canal will enable more all-water trade between Shanghai and Savannah, Ga., California ports could expect to benefit from an increase in the volume of goods arriving by sea from Europe, Africa and South America. In one local example, the Port of West Sacramento's new harbor crane, which arrived earlier this month, transited the Panama Canal en route from its European manufacturer.
In any event, the diversion of some cargo to all-water routes through Panama does not necessarily mean that fewer goods will be moving through the West Coast. Indeed, all long-term forecasts anticipate a steady increase in seaborne trade between North America and Asia. A rising tide of maritime business will generally lift all ports except, perhaps, those in places that chose to be indifferent to world trade.
Then there is the matter of Panama's undisguised ambition to position itself as an intermodal hub for Latin American trade. Even an expanded canal will have capacity limits. Should the canal become a more intensively used route for trade between Venezuela and Chile or between Brazil and China, then the impact of the canal on California's ports would be lessened.
Another mitigating factor might simply be cost. At the moment, no one knows exactly how much the Panama Canal Authority will charge for a right of passage through its new locks. Higher than anticipated fees, coupled with the inventory costs of the additional days that cargos are at sea not to mention rising fuel prices could make the generally faster intermodal routes through California's ports a relative bargain for many cost-conscious importers.
Moreover, the major shipping lines appear determined to achieve greater and greater economies of scale by ordering larger and larger container ships that can be accommodated by fewer and fewer ports. The largest of these vessels are too big to pass through even the new locks at Panama. But they are well-suited to the ports of Los Angeles, Long Beach and Oakland, whose ability to handle these huge ships will remain a major advantage so long as their rail and road links to major U.S. markets are able to cope with larger volumes of trade.
And there's the rub and why, despite its penchant for hyperbole, the Jobs 1st Alliance has an exceedingly legitimate case.
As I noted in a Dec. 4 Forum article, California has not merely failed to invest adequate sums in maintaining its transportation infrastructure, it has allowed projects aimed at remedying deficiencies in its goods movement system to become bogged down in environmental review and NIMBY lawsuits.
Ultimately, the bottom-line question here is whether California's political leadership is genuinely committed to preserving private sector jobs paying middle-class wages. Spending money on needed infrastructure enhancements and expediting their completion would help safeguard the future of California's seaports, while clearly signaling that this once golden state is at last getting serious about vying for the world's business.
So what is the impact of the larger Panama Canal likely to be on California's ports? Frankly, it's not entirely clear.
JOIN THE CONVERSATION: Should California spend more money on infrastructure for ports and expedite completion? Leave a comment.
California lawmakers seek to bring home the transportation bacon without earmarksPublished: Tuesday, Jan. 31, 2012http://www.sacbee.com/2012/01/31/4226739/california-lawmakers-seek-to-bring.html?storylink=lingospot_related_articlesWASHINGTON Massive House and Senate transportation bills moving this week total well over 1,000 combined pages, without designating a single California project.
Long Beach port finalizing $4.6B shipping leasePublished: Thursday, Jan. 19, 2012http://www.sacbee.com/2012/01/19/4199818/long-beach-port-finalizing-46b.html?storylink=lingospot_related_articlesLONG BEACH, Calif. -- The Port of Long Beach, the nation's second-largest cargo container facility, reached a tentative $4.6 billion, 40-year lease with a major Hong Kong-based shipping container line.
Work began earlier on the California harbor's $1.2 billion Middle Harbor Redevelopment, its largest-ever terminal upgrade and expansion project. Improvements announced Thursday include a new terminal, upgraded wharfs, a storage area and expanded on-dock rail yard.
When completed, it is expected to add 15,000 jobs to the local economy.
LA port exports record 2.1M cargo containers
Published: Wednesday, Jan. 18, 2012
Year-end statistics released Tuesday show the port is the first in the nation to ship more than 2 million containers.
The Port of Los Angeles moved 176,531 export containers in December to bring the total to 2.11 million containers for the year. The port's previous record was 1.84 million export containers in 2010.
Los Angeles handled 7.94 million import and export containers last year, which compares to 7.83 million in 2010.
Combined with the neighboring Port of Long Beach, the twin harbors moved about 14 million containers last year. That's down slightly from the 14.1 million in 2010.
30 results for "Jock O'Connell "Published on Mon Jan 30 00:00:00 PST 2012NewsPublished on Sun Jan 29 00:00:00 PST 2012
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Not even the March earthquake and tsunami that ravaged trading partner Japan were enough to derail California's export momentum.Most of the material above is written by Jock O'Connell; here is more information on him...Jock O'Connell (born 1947) is a widely quoted American economist whose research focuses on logistical issues associated with international trade. He is the ...en.wikipedia.org/wiki/Jock_O%27Connell - Cached
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