L.A. Ports Drawing Shippers, West Coast Competition Slips

By CONOR DOUGHERTY

Staff Reporter

The Port of Los Angeles has been grabbing market share from other West Coast ports as cost pressures force shippers to decrease the amount of cargo going to smaller destinations.

Los Angeles container traffic (imports and exports) for 2001 increased 6.1 percent, or 5.2 million TEUs (20-foot equivalent units), according to figures released last week. Each of the other four West Coast ports, including Long Beach, saw a decrease from 2000.

Overall, shipments to the five major ports, which account for more than 90 percent of the sea cargo shipped to the West Coast, decreased 1.3 percent.

Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., said steamship companies send their largest ships into the Port of L.A., not only to unload goods destined for locations throughout North America, but because of the huge local market. In addition, shippers, under pressure to cut costs, have begun dropping service to other West Coast destinations with smaller markets.

“What’s happening is the Port of Los Angeles is taking business from other West Coast ports,” Kyser said.

For example, the Port of Seattle had 1.3 million TEUs in 2001, a 13.3 percent drop from the year earlier. Many liners have cut back on the number of West Coast stops or the volume of cargo dropped off at ports other than Los Angeles.

“First and foremost ocean liners are concerned with reducing vessel operation costs Los Angeles is the beneficiary of that,” said Port of Seattle spokesman Mike Schultz.

Many shippers and freight forwarders cite the area’s many rail and trucking services as reasons to choose Southern California as their only West Coast destination. In addition, the ports are more easily accessible than other West Coast ports, where it can take up to seven hours to dock.

Even so, the Port of Long Beach saw a three percent decline in cargo traffic for 2001, to 4.5 million TEUs. Long Beach officials said that Los Angeles benefited from an increase in shipments originally scheduled for the Northwest mainly because of its large size.

“Some of the ships that would have called in the Northwest came to Southern California, and most of them went to Los Angeles,” said Art Wong, a spokesperson for the Port of Long Beach.

Luck also played a role for L.A. Wong said that during the economic boom of the late 1990s, several shipping lines moved to Southern California. At the time, the Port of Long Beach was filled to capacity and Los Angeles received the overflow of new traffic. “Some of those lines have done well, and that has given L.A. growth,” Wong said.

Local ports faster

Guy Fox, chairman of Global Transportation Services Inc., an international freight forwarder, said he prefers the Los Angeles and Long Beach ports over other West Coast destinations because they provide faster service.

“There isn’t a lot of bureaucracy (at either Long Beach or Los Angeles),” said Phillip Wright, a vice president at Zim Container Service, an ocean carrier that ships to every major West Coast port.

Still, what pulls shippers to Southern California are consumers. “I think, frankly, shippers don’t care about ports,” said Bob Kleist, a corporate advisor to Evergreen American Corp. Kleist has spent over 50 years in the shipping business.

“Any steamship coming to the West Coast must call on Los Angeles or Long Beach because of the large local market. You could probably run a reasonable service running cargo just into L.A. You’d go broke trying to do that anywhere else on the West Coast,” he said.

Schultz said he expects the trend to continue as long as the economy keeps struggling. When shipping gets back to pre-recession levels, he expects to see an increase in traffic at smaller ports.

Kyser had a similar prognosis. “The consensus seems to be (2002) is going to be a slow year overall,” he said. “If business stays flat, I think L.A. will continue to post increases while everyone else will be struggling.”