By ELIZABETH HAYES

Staff Reporter

Among the plum local operations thriving as a result of the huge and growing volume of trade with China, probably none is juicier than the China Ocean Shipping Co.

And that has mouths watering among L.A. and Long Beach city officials.

Beijing-based Cosco, which is owned and operated by the government of the People's Republic of China, has operated an 80-acre cargo terminal at the Port of Long Beach since 1981.

But it is rapidly outgrowing its Long Beach terminal and has been looking to expand. Those efforts thus far have been frustrated by opposition to the Port of Long Beach's plan to build a new, larger terminal for Cosco on an abandoned Navy base.

Meanwhile, Los Angeles city officials are using the logjam in Long Beach as an opening to woo the Chinese shipping behemoth to a new terminal being built at San Pedro. A contingent of L.A. officials left late last week on an Asian trade mission, during which they plan to visit Cosco officials in Beijing.

The factor that determines where Cosco will ultimately put its L.A.-area terminal may not be size, terms of a lease agreement, or the terminal completion date. It may boil down to relationships, port officials say.

"In the Chinese culture, long-term relationships are valued. They value our relationship and they know we've stood by them and will continue to do so as long as there's any hope of expanding in Long Beach," said Yvonne Avila, spokeswoman for the Port of Long Beach. "I think they'd like to stay in Long Beach."

Rocky Delgadillo, L.A. deputy mayor for economic development, agreed that Cosco officials' reluctance to leave Long Beach is at least partially due to their cultural attitudes about "saving face" by maintaining long-term relationships.

But lawsuits by preservationists and two neighboring cities, and opposition from environmentalists and right-wing politicians, have waylaid plans for a new $200 million terminal at the shuttered Long Beach Naval Station.

L.A. officials are making no secret of their desire to win Cosco.

"We've got some facilities that would really please them," said Larry Keller, executive director of the Port of L.A. In particular, the seaport is in the midst of a major capital improvement program, including the $600 million Pier 400, which will be the largest terminal complex in North America.

Cosco officials in Beijing, Los Angeles, Long Beach and New Jersey could not be reached for comment on the company's plans for its L.A.-area operations.

Despite setbacks, the Long Beach plans are still going forward. Earlier this month, preservationists withdrew a lawsuit challenging the project. And in May, the Navy is expected to issue a decision on transferring the base property to Long Beach and on the best reuse of the land, Avila said.

The three reuse options being reviewed by the Navy include Long Beach's original plan for a major cargo facility and on-dock railyard, as well as two, less-lucrative alternatives. Those other options are: an auto terminal and museum, preserving the historical buildings on the base; or a museum, with harbor administration, police and fire stations sharing the historical structures. Both of those options call for some acreage to be devoted to cargo containers and ship repair facilities.

"If the Navy comes back and says, 'Yes, you can have the land and a container terminal is proper, we could talk to Cosco or somebody else,' " Avila said.

Long Beach city leaders have hailed their proposed terminal project as a means to counter the economic turmoil wreaked by the loss of the naval station and shipyard in the last four years. The proposed terminal, if built, would create an estimated 300 to 600 permanent jobs and provide about $1 million a year in additional city tax revenue.

"Economically, they (Cosco) are very sound tenants for us," said Long Beach Mayor Beverly O'Neill.

Cosco ships about 300,000 containers a year through Long Beach and generates hundreds of jobs there, Avila said.

"Cosco is making it possible for 300 people to be employed," she said. And with about 3,000 containers going on and off each ship that docks, work is generated for about 1,500 truck drivers, as well as freight forwarding companies, customs brokers, warehousers, accounting and legal firms.

Cosco is one of the largest transportation companies in the world, with more than 50,000 employees and a fleet of more than 600 ships. Its volume of shipments to and from the United States has been rising by an average of 39 percent per year, with the company handling about 25 percent of all U.S.-China trade.

Currently, Cosco shares a 130-acre terminal in Long Beach with Zim American Israeli Shipping Co.

"Right now, the terminal is satisfactory," said Ed De Nike, vice president of Stevedoring Services of America. "But with the growth in their traffic, it won't be."

A top Cosco executive said last spring that the current facilities are too small and congested, so customers have to wait to pick up their cargo. That official Gao Gao Wei Jie, Cosco's director of transportation in Beijing also said longer delays would interrupt Cosco's future planning and affect trade between China and the United States.

"The ports of Southern California really have to move forward and that's exactly what Long Beach (is) doing," Fox said. "They're trying to expand the port and bring in a more modern terminal that's the wave of the future."

Other West Coast ports, including Oakland, Seattle and Tacoma, would love to have Cosco, he said.

"(Retaining Cosco) is very important for the Port of Long Beach," Fox said. "(Cosco) is going to be a big player in the future. It can't get anything but bigger."

Staff reporter Larry Kanter contributed to this report.

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