West Coast ports face struggle to maintain relevance
The global financial slowdown has already slashed traffic, and a major Panama Canal expansion will bring new competition.
The slowdown in international trade has left the docks at the nation's biggest seaport complex quieter than they've been in years.
Some workers, particularly non-union "casuals," at the Los Angeles and Long Beach ports wait for shifts that never come. Automobiles and other merchandise pile up as consumers dig in for a long economic winter.
But the problems at the twin ports, along with smaller West Coast harbors, extend beyond the nation's economic woes, maritime experts say, and changes on the horizon could leave the seaports struggling to keep customers.
That's the assessment of a recent report by London-based Drewry Supply Chain Consultants, a maritime industry research firm that has about 3,000 clients in more than 100 countries. West Coast ports will see increased competition from the Panama Canal, which is undergoing a bigger-than-expected expansion due to be completed in 2014, Drewry said. In addition, rising Chinese labor costs will push some manufacturing back to Mexico and South America.
Even if global trade returns to its formerly robust pace, Drewry said, "any new trade will probably pass the West Coast by. Volumes are unlikely to decline, but the days of strong growth on the Pacific Coast are behind us."
The implications are potentially enormous.
The ports of Los Angeles and Long Beach are directly or indirectly responsible for 886,000 jobs in California, according to a 2007 study by the Alameda Corridor Transportation Authority. The $256 billion in U.S. trade that moved through the ports that year, including $62.5 billion in California cargo, was also responsible for $6.7 billion in state and local tax revenues, the study said.
But times change, Drewry and other maritime experts say, and future economic conditions will shine a more favorable light on the all-water routes to East Coast and Gulf Coast ports by way of the Panama and Suez canals.
Some of that trend can be seen already.
A.P. Moller Maersk, the world's biggest shipping line, this year reduced its business from Asia to the U.S. West Coast in favor of stronger Asia-to-Europe trade. This month, the Denmark-based giant announced more changes.
Maersk said it would join with the world's third-largest shipping line, France's CMA CGM, and cut back its Asia-to-U.S. business by an additional 8% with new routes through the Panama and Suez canals.
