The slowdown at the ports of Los Angeles and Long Beach is having a ripple effect on the Alameda Corridor, the 20-mile rail route built to speed the flow of cargo from ships to retail shelves.
Reacting to a swift erosion in the corridor's traffic and revenue, Fitch Ratings recently placed about $2 billion worth of Alameda Corridor Transportation Authority bonds on a "rating watch negative."
That was a signal that the ratings service intends to more closely monitor the corridor's ability to repay its debts.
The corridor authority has enough of a revenue cushion to last until late next year, said its chief executive, John Doherty.
If the situation doesn't improve by then, he said, the agency will have to turn to the governing boards of the ports, which are obligated to cover shortfalls of up to 40% in the authority's annual debt payments.
"It depends on how long this recession goes forward, but as of now we have no issues," Doherty said. "There is no likelihood of a shortfall before late 2010, and if it does occur, the ports will recover what they have paid out when our revenue stream recovers."
For the first quarter, corridor revenue was $17.8 million, down 21% from the same period last year.
The corridor, which opened in 2002, is suffering from the sharp downturn in international trade.
The Port of Los Angeles, the nation's largest cargo gateway, reported Thursday that the number of containers carrying imported goods fell 15% to 279,194 in April from the same month in 2008, while exports dropped 4% to 140,829.
At Long Beach, the No. 2 U.S. container port, inbound loaded containers fell 29% to 199,051 and outbound loaded containers declined 31% to 112,976 in April.
The collapse in international trade has been largely invisible to most people, noticeable perhaps only because of lighter truck traffic on the nation's most heavily traveled freeways. But the industry isn't expected to recover until next year, no doubt adding to last year's 46,000 lost trade jobs locally, according to the Los Angeles County Economic Development Corp.
"The international trade outlook for 2009 and beyond faces several challenges," said the group's Jack Kyser.
In a trade report issued Wednesday, Kyser and fellow economist Nancy Sidhu projected that the number of containers moving through the twin ports would fall 13.5% this year on top of an 8.9% drop last year. International trade is expected to begin growing again next year, but the ports are expected to see only a 1.6% rise in imports and exports.
Trade tracker Paul Bingham expects traffic into North America's 12 busiest container ports to improve later this year.
"Our bigger-picture forecast is that imports are going to pick up before the end of the year," said Bingham, managing director of global trade and transportation for IHS Global Insight. "You'll see businesses starting to rebuild inventories and consumers starting to spend again. We just don't see much strength in anything before that. The economy is still shrinking; it's just not shrinking as much."
Business is slow at Lantech Systems, a Torrance company that makes high-end computer servers and workstations used for animation and visual effects. In good times, big companies farm out work to smaller contractors that buy Lantech products, which are custom made from parts shipped through the L.A. port. In times like these, there is less work and not much need for more parts.
"We usually order in bulk, but right now the forecasts for that are not there," said Altaf Lalani, Lantech's vice president of sales and marketing. "It's like you're standing in the kitchen, the pot's on, and you don't know what to cook."
The company has employed as many as 10 people but now gets by with eight. "It's pretty scary, actually," Lalani said.
"It's not just one or two sectors; it's the whole economy. . . . We're hoping for things to get better by the third quarter of this year."