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Tiny Port of Hueneme is hit by a perfect storm
On the vast tarmac that marks the Port of Hueneme, a couple of dozen Volvos sit waiting to be trucked to a dealership. There are no bananas coming in this day, no construction equipment, no cars.
Business at the 130-acre port is way down since the boom times ended. Hueneme lost $1.3 million during the fiscal year that ended June 30, down from a profit of $1 million in 2008. It has been even harder hit than its massive siblings, the ports of Los Angeles and Long Beach, where profits dropped 40% during the fiscal year and container traffic was down 21%.
Unlike those larger operations, which serve thousands of cargo ships each year and process millions of containers filled with myriad products, Hueneme is a niche port, relying mostly on automobile and produce imports for its business.
If there's trouble in one of those businesses -- as there was this year in the auto industry -- there's trouble at the port.
Local jobs have been affected too. Although there's still work at Hueneme, local dockworkers have to compete with struggling hands who have come from other ports seeking employment.
On a recent day, 126 dockworkers from cities up and down the Pacific Coast came to apply for jobs, said Jess Herrera, president of International Longshore and Warehouse Union Local 46.
"The thing about niche ports is this: If something happens to that niche, you are taking a big hit," said Jim Kruse, director of the Center for Ports and Waterways at Texas A&M University.
During the economic boom, Hueneme viewed itself as the back door of the ports of Los Angeles and Long Beach.
As those ports expanded their traffic in products that are shipped in huge containers, Hueneme took the imports, like fruit and automobiles, that traveled loose. The port even installed pumps that look like giant carwash vacuum cleaners at dockside, ready to suck up the day's squid catch from the holds of fishing vessels that no longer had a home at the larger ports.
It was a great business model -- until the economy tanked.
"The business deals were just walking through our door," said Anthony J. Taormina, executive director of the Port of Hueneme. "That has changed dramatically. Los Angeles and Long Beach aren't pushing away any kind of business in this recession. My job is much harder now."
Pound for pound, imports at Hueneme were up 3.7% in the quarter that ended Sept. 30 compared with the year before, according to the Oxnard Harbor District, which runs the port. But the dollar value of the cargo that moved through the facility during the first eight months through August of 2009 plummeted to less than $2.1 billion from nearly $4.1 billion during the same period a year earlier, according to the World Institute for Strategic Economic Research, which tracks data from ports throughout the U.S.
The drop in auto shipments was a big blow. During the quarter that ended in September, Hueneme processed 30,500 metric tons of automotive imports, down 22% from a year earlier. Other imports brought the total tonnage up a bit over the previous year to 205,000 metric tons. But the produce, machinery and other items that came in were worth much less than the cars would have been -- and garnered far less revenue for the port.
Taormina says he is taking on the problem in several ways.
He is developing sister port relationships with two of Mexico's most promising West Coast seaports, Manzanillo and Lazaro Cardenas, hoping to attract future cargo in a trade that is dominated by East Coast ports.
Taormina is talking to businesses in Ventura County that ship and receive goods through the ports of Los Angeles and Long Beach, suggesting that it might be quicker to move their goods to and from those ports by ship or barge from the Port of Hueneme than to truck them along clogged freeways. He's also thinking about what can be done to lure away some of the non-container freight that remains at the ports of L.A. and Long Beach.
"We can compete on service," Taormina said. "Here, they will be an important customer."
Hueneme isn't alone among the nation's smaller ports in scrambling for new business.
Some Gulf ports in Texas are emphasizing green technology, such as wind-powered equipment. The Port of Nanaimo in British Columbia is trying to attract more cruise industry business. And with additional traffic expected from an expansion of the Panama Canal, little Port Manatee in Florida is rebuilding and billing itself as the first U.S. port along the route that can handle cargo containers.
"A lot of ports have just tried to hunker down and cut costs," said Aaron Ellis, a spokesman for the American Assn. of Port Authorities. "But as a hedge against this economic uncertainty, other ports are moving in a lot of different directions."
There are some positive trends at Hueneme. Its two main produce importers, Del Monte Foods Co. and Chiquita Brands International Inc., have expanded their market share over the last year. That has meant an increase in such items as banana imports, which were up 9.4%, from 145,000 metric tons to 159,000 metric tons in the first quarter, which for Port Hueneme runs from July through September.
General cargo was up 13%, from 13,700 metric tons to 15,500 metric tons. It's a category that covers household goods and oversized cargo, such as cryogenic tanks for Vandenburg Air Force Base and a tunneling device to be delivered to Las Vegas.
One unusual bit of business comes from vehicle exports to China, which has surpassed the U.S. in personal automotive purchases. The port is on pace to export about 4,700 Buick Enclaves, Acuras and Cadillac CTS models this year, up from just 750 last year.
The breadth of business handled by small ports like Hueneme is one reason some experts say niche ports will not be edged out of business by their much larger counterparts, even in hard times.
"Small ports will continue to be very necessary," said Asaf Ashar, head of the Washington office of the National Ports and Waterways Institute. "They can focus on specific cargoes and customers. They can argue that they are more responsive, less expensive and more agile."
For Taormina it still comes back to that empty asphalt. In the coming months, he expects to see a lot more vehicles parked on port property as carmakers bring in their 2010 models. But if business at dealerships is slow, the vehicles will sit at Hueneme, in effect, in storage.
"Do I think they will move quickly or sit in storage?" Taormina asked. "Unfortunately, I think it will be storage."