The international trade business is foundering faster than ever seen before, with some U.S. seaports watching cargo traffic fall by more than a third.
It's gotten so bad that Los Angeles and Long Beach are slashing cargo rates to keep old customers and lure new business. Oakland's port has laid off 12% of its staff and canceled free tours for the public. The number of ships idled around the world is approaching three times the number that were out of work during the last big ocean trade collapse, in 2002.
"It's phenomenal how much things fell away even since December," said Paul Bingham, managing director of global trade and transportation for IHS Global Insight, the business research firm that monitors North America's biggest ports for the National Retail Federation.
"Assuming the stimulus package works, you end the free fall in the second quarter, when you no longer see this accelerated decline," Bingham said. "If the stimulus does not work, I don't think we know where the bottom is."
There's a huge ripple effect at the docks and roughly 10,000 acres of maritime facilities at the ports of Los Angeles and Long Beach, the nation's busiest. The port complex is a trade gateway that employs more than 280,000 workers in Los Angeles County and annually handles $357 billion in goods. The effect is being felt in the loss of high-wage jobs and in spiraling real estate vacancies in inland warehouse and distribution districts, experts said.
In February 2006, during the last boom year at the L.A. and Long Beach ports, there was work for 1,100 to 1,200 union and nonunion laborers on each day shift, and sometimes for more than 1,500, according to daily dispatch summaries. This February, the average slipped to about 660 workers per day shift. On the slowest day last month, demand for workers fell as low as 384. Jobs opened up for 751 people on the slowest day of February 2006.
As severe as the shift has been in Los Angeles and Long Beach, where February imports fell 18.1% compared with the same month in 2008, it's worse in other places, according to the monthly cargo figures collected by IHS Global Insight.
West Coast ports are bearing the brunt, which some experts view as a troubling sign that cargo is being diverted to other trade gateways.
Oakland is expected to be down 22% in February, compared with a year earlier, as U.S. consumers continue to rein in spending and as retailers cut factory orders to avoid building inventories that won't sell.
