Maersk Move Increases Cargo Edge for Los Angeles Port

By DAVID GREENBERG
Staff Reporter

The Port of Long Beach continues to feel the effects of the loss of its largest terminal operator moving to the Port of Los Angeles last summer, with May cargo activity slumping 9.3 percent while the Port of L.A. had a 22.7 percent increase.

Long Beach officials said the results were anticipated, and that the loss of Maersk Sealand would be partly made up by two other shipping operators. They are Mediterranean Shipping Co., which moved from Los Angeles in January, and Hanjin Shipping Co., which moved from a 117-acre terminal to a 275-acre terminal within the Long Beach port last November to expand its operation.

Long Beach port spokeswoman Yvonne Smith said that reduced container counts were expected following the departure of Maersk Sealand, a trading name of A.P. M & #345;ller-M & #263;rsk A/S.

"Our existing container terminals are doing very well," Smith said. "Despite their strength, we have not been able to recapture all of the 1 million TEU loss as a result of the loss of Maersk."

Maersk Sealand moved 1 million TEUs (20-foot equivalent units) per year at Long Beach before it began its exodus to a new 316-acre terminal in August.

Los Angeles routinely handles more container cargo than Long Beach, but the differential has been widening in recent months.

In May, L.A. handled 651,906 TEUs, compared with 531,214 TEUs for the like period a year ago, while Long Beach handled 388,386 TEUs, down from 428,033.

"I expected a stronger performance for Long Beach," said Jack Kyser, chief economist of the L.A. County Economic Development Corp. "I'm a little bit worried. The ports are both such important economic engines."

It's true that shippers were making larger-than-usual orders of goods from Asia this time last year in anticipation of a possible strike by the International Longshore and Warehouse Union.

Meanwhile, additional delays in product orders ensued this spring when most small- and medium-sized shippers cancelled their product inspection trips to Asia due to SARS.

But all ports have faced those issues in the past year. "Everybody is in the same boat," said Kyser.

Some in the shipping community believe Los Angeles has become the preferred port because its operation is more friendly to just-in-time delivery operations.

More than $100 million in near-dock rail facilities that came on line within the last three years allow cargo to be moved out of terminal yards faster and offer speedier connections to the Alameda Corridor without the use of trucks.

L.A. also has the port complex's only on-site storage rail system.

"These rail terminals were well-positioned to capture a larger portion of the intermodal cargo and speed it through faster and more cost-efficiently," said Jim MacLellan, the L.A. port's marketing director, who oversees the retention and expansion of the facility's customer base.

Despite a decline in cargo traffic, the Long Beach port is not expected to suffer as much on the revenue side because Maersk had been paying only $60,000 per acre at its 100-acre Pier G terminal, based on a long-term lease.

International Transportation Service, which moved into Pier G late last year, is now paying the same $112,000 per acre as other newer tenants.

Maersk Sealand pays $123,000 per acre annually at the L.A. port.

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