Port upgrades urged to keep pace with Panama Canal expansion

Port and city officials have called for expediting planned upgrades at the ports of Los Angeles and Long Beach to stave off the threat of losing cargo traffic when the $5.25-billion Panama Canal expansion is completed next year.

At a hearing Friday at Los Angeles City Hall, state officials heard testimony from trade economists, shipping line representatives and labor groups on how the state can promote the ports so they keep their share of U.S. cargo traffic, which harbors on the East and Gulf coasts are eager to lure away.

The two seaports, the largest in the U.S., currently receive about 40% of the nation's cargo traffic.

But as construction nears completion on two new Panama Canal locks that will be able to accommodate massive cargo vessels, Southern California officials are increasingly worried about the effect on the state economy — namely the loss of logistics jobs. An estimated 640,000 people work in trade-related jobs in Southern California.

A coalition of labor, business and government estimates that the ports could lose up to 25% of their cargo traffic when the canal upgrade is completed. Trade economists, however, say it's too early to make any reliable estimates on the economic effect on the state.

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Retail Imports to Increase 3.9% in December Despite Port Strike

Import cargo volume at the nation's major retail container ports is expected to increase 3.9% in December despite a strike that closed the nation's largest port complex for the first few days of the month.

Retailers are keeping a close watch on a possible strike on the East Coast and Gulf Coast, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates.

"After a strong kickoff on Black Friday and Cyber Monday, the holiday season is looking good and these numbers reflect that," NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said. "Nonetheless, we narrowly avoided what could have been a long-term disruption with the strike in Los Angeles and Long Beach and don't want to run that risk on the East Coast and Gulf Coast. NRF is continuing to urge labor, management and lawmakers to do whatever is necessary to keep our nation's ports running smoothly."

U.S. ports followed by Global Port Tracker handled 1.39 million Twenty-foot Equivalent Units in October, the latest month for which after-the-fact numbers are available. That was down 1% from September, but up 5.2% from October 2011. One TEU is one 20-foot cargo container or its equivalent.

November was estimated at 1.22 million TEU, down 5.6% from last year. The downturn was due in part to the eight-day strike that closed most terminals at the Ports of Los Angeles and Long Beach beginning in the last few days of November, but also because November is a traditionally weak month after most holiday cargo has arrived.

December is forecast at 1.27 million TEU, up 3.9% from last year, with January forecast at 1.31 million TEU, up 2% from January 2012; February at 1.15 million TEU, up 5.9%; March at 1.27 million TEU, up 2%, and April at 1.35 million TEU, up 3.2%.

August, September and October are the three busiest months of the year as retailers bring merchandise into the country for the holiday season, and volume for the three months combined was up 3.6% at 4.2 million TEU. While cargo volume does not correlate directly with sales, NRF is forecasting that holiday sales will increase 4.1% to $586.1 billion this year.??

The first half of 2012 totaled 7.7 million TEU, up 3% from the same period last year. For the full year, 2012 is expected to total 15.8 million TEU, up 2.5% from 2011.

Hackett Associates Founder Ben Hackett said the Los Angeles/Long Beach strike shifted some cargo into December but would not have a significant effect on net volume for the year. But retailers are closely monitoring the situation at East Coast and Gulf Coast ports, where a contract extension expires Dec. 29.

"While the strike led to some diversion of cargo to Oakland and ports further afield, we believe much of the cargo destined for LA/Long Beach will simply arrive at the port later as vessels adjust their rotations," Hackett said. "As we look ahead into the coming months of 2013, the main threat to cargo flows through the ports would be a strike on East Coast and Gulf Coast. There is little option for diversion."