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SHIPPING : Tide may be changing at Port of L.A. : Exports in October rise, and glimmers of hope are seen up and down the West Coast.

November 17, 2009|Ronald D. White

Exports were up at the Port of Los Angeles in October for the first time this year, as Chinese consumers led a drive to buy U.S. products and factories stocked up on raw materials.

The improvement over October 2008 is the first sign from the troubled Southern California port complex that global economic conditions may be starting to recover. At the Port of Long Beach, exports were down, but not nearly as much as they have been for most of the year. Imports were down at both ports, though the decline was not as steep as in prior months.

These glimmers of hope at the nation's business trade hub for container cargo were echoed up and down the West Coast, where the decline in shipping has slowed considerably.

"Trade volumes have begun to creep up," said Paul Bingham, managing director of the global commerce and transportation practice for IHS Global Insight. "You are seeing some strengths in the Chinese economy from the positive effects of their stimulus package. They are buying more, and not just raw materials but also finished goods in electronic equipment and automotive equipment."

But recovery -- if that's what this is -- will probably be slow. Economists say it could be years before the volume of trade at West Coast ports returns to levels seen in 2006 and 2007. The drop in imports at Long Beach slowed only slightly in October, and at some ports, such as Oakland, it has yet to slow at all.

Seaport officials and railroad operators worry that a sluggish recovery will not be enough to sustain their businesses, as competition among ports increases and the shipping business continues to consolidate. Still more competition is expected in coming years as new shipping routes are developed in Panama, Canada and Mexico.

At stake are tens of thousands of trade-related jobs including dock work, warehouse and distribution, executive-level logistics and supply-chain management.

"The West Coast has never had to promote its competitive advantage before," said Kathryn McDermott, the L.A. port's deputy executive director. "For 30 years, we just grew."

She said there would be fierce competition from an expanded Panama Canal and new port developments in Canada and Mexico for a share of shrinking international trade.

So West Coast ports are touting their investments in new terminals and railroad tracks and their ability to load and unload ships faster than their East Coast and Gulf Coast competitors.

"This is a response to a new reality. We are going to play by different rules. We are going to defend our gateway," McDermott said. Long Beach also plans to aggressively recruit shippers.

Overall, October imports fell at the five biggest West Coast ports to 851,900 containers, down 14.2% from a year earlier. Exports were down 1.8% to 435,800 containers.

Los Angeles' numbers were among the strongest. October exports were up 11.8%, at 150,657 containers. Imports were down 8.7%, at 338,735 containers. That was a big improvement compared with the first 10 months of the year, when imports declined 15.4% to about 5.6 million containers.

Exports through Long Beach were down 10.1% in October to 119,194 containers. That's a significant improvement over earlier this year -- overall, exports are down 24.8% through the first 10 months of 2009. Imports at Long Beach were down 22.4% in October to 227,064 containers, only a slight improvement over the 23.7% drop at the port through the first 10 months of the year.

Part of the problem facing ports is that international ocean shipping lines are losing money -- up to $22 billion as an industry this year -- and consolidating. Many companies owe millions on new ships that they ordered during the boom and no longer need.

Even with record numbers of vessels being scrapped and deliveries of new vessels delayed, the industry is expected to be stuck with too many at least through 2011, according to AXS-Alphaliner, a maritime research firm in Paris.

To save money, shipping lines have gone to unusual lengths to consolidate routes to a smaller number of ports. They are also using smaller vessels and sharing space aboard with rivals in order to run those ships without a lot of empty container slots.

This has been particularly difficult for the Port of Long Beach, because during the boom the harbor took ships that couldn't find room at neighboring Los Angeles. Art Wong, a spokesman for the Port of Long Beach, said the move to smaller vessels has meant fewer giant ships have docked at the Port of Long Beach.

After so many years of growth, the drop in West Coast shipping was a jolt that compelled port officials to start contacting the major Western railroads in late summer and early autumn to discuss presenting a united front to the global shipping community.

"The West Coast ports offer 200 to 250 weekly trains to all major intermodal hubs in the United States," said Geraldine Knatz, the Los Angeles port's executive director. "Cargo shipments leave our docks within eight hours of arrival by ship."

The numbers they put together, Knatz said, showed that nothing inside the U.S., or outside, could compare.

"No one else can do what we do," said McDermott, and the ports plan to take that case to the shippers.

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ron.white@latimes.com

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