In a move that threatens to unseat Long Beach as the nation's busiest container port, the world's largest shipping company announced Wednesday that it will move its local cargo operations across San Pedro Bay to Los Angeles.
Maersk Inc., which recently bought Sea-Land Services Inc., has agreed to lease space on Pier 400 in the Port of Los Angeles, an enormous container terminal now under construction in the middle of the harbor.
Long Beach officials said they tried to persuade Maersk to move to the controversial Long Beach Naval Base, but after a year of negotiations the Danish-owned shipping giant decided Pier 400 would be cheaper and more convenient than the abandoned naval facility.
"This will be a state-of-the-art facility for the U.S.," said Los Angeles Harbor Commissioner Ted Stein. "We are thrilled a world-class facility has attracted a world-class client. It is a win-win situation."
Maersk officials said Pier 400 offers the company on-dock rail lines, good highway access, lower operating costs and the opportunity to custom build a 484-acre terminal that can easily accommodate its fleet of giant container ships that move cargo to and from Asia.
Maersk's parent company, A.P. Moeller, builds the largest freighters in the world--ships that carry so many containers that large terminals are needed to efficiently handle them all.
Under terms of the agreement, the Port of Los Angeles stands to earn about $2 billion in revenue from the 25-year lease, which is scheduled to begin in mid-2002. When the facility is finished, Maersk officials predict that it will be the largest container terminal in the world.
The company's executive vice president, Philip V. Connors, said Maersk signed a memorandum of understanding with the port and the agreement will be completed in the months ahead. He said he does not expect any major obstacles during the finalization process.
The relocation of such a large shipping line to Los Angeles represents a serious threat to the dominance of Long Beach as the country's premier container port. Over the last 12 months, the harbor has handled the equivalent of 4.3 million 20-foot shipping containers, while Los Angeles has moved about 3.7 million.
Maersk and Sea-Land now handle the equivalent of 1 million 20-foot shipping containers a year in Long Beach, where they have leased terminal space since 1978 and 1962 respectively. Both companies account for about 13% of the port's revenue.
