Trade Missions Prime Pump for L.A. Port : Commerce: The facility has surpassed New York to become the nation’s busiest commercial gateway. Visits to foreign customers are vital to that status, officials say.
It was a small matter, really, in the multibillion-dollar world of the Sony Corp. Seven shipping containers crammed with televisions, radios and electronic gadgets had disappeared from a terminal at the Port of Los Angeles.
The incident happened nearly six months ago, but port officials were still jittery about it when they called on Sony officials here last week.
“The numbers are insignificant,” said Ezunial Burts, executive director of the Port of Los Angeles. But Burts said he was concerned that an important tenant would lose confidence in the port.
As it turned out, the worrying had paid off. Months of apologies, assurances and tightened security had satisfied the Sony officials, and the Los Angeles delegation emerged smiling from their meeting.
The Sony visit was one of dozens made by the seven-member group during a weeklong trade mission to Korea and Japan that ended Friday. Port officials said that attention to matters large and small has helped to push the Port of Los Angeles into the forefront of Pacific Rim trade.
While part of the group headed off to make calls on port customers, Los Angeles Mayor Tom Bradley, who led the delegation, met with Japanese Prime Minister Toshiki Kaifu and had sessions with local and regional government officials.
The trip, like dozens made by port officials in recent years, was part public relations, part negotiation and part intelligence-gathering.
“I’ve been here many, many times,” Burts said. “You can’t do business by fax or letter. You have to do business face to face and it takes time. That’s what pays huge dividends.”
The trip comes just seven weeks after the U.S. Customs commissioner announced that the Port of Los Angeles has surpassed New York as the nation’s busiest commercial gateway. Port officials said the news gave the delegation a strategic boost, particularly in dealing with the status-conscious Japanese.
Now a hub of international commerce, the Port of Los Angeles has undergone remarkable development in recent decades, and the recent milestone represents a significant east-to-west realignment in commerce.
A century and a half ago, when New York was already a bustling international seaport, the marshlands of San Pedro were so dismal that they inspired a young seaman named Richard Henry Dana to describe the place as “the hell of California,” an observation he included in his classic “Two Years Before the Mast.”
Last year, according to the Customs statistics, the equivalent of about 1.4 million loaded, 20-foot cargo containers passed through the Port of Los Angeles. That volume established the port as the leading source of government revenue from commercial traffic, with annual collection of tariffs and fees in excess of $1.7 billion.
New York Ranking
New York ranked second in terms of commercial traffic in 1989, with 1.2 million of the standardized containers imported or exported. The Port of Long Beach was a close third, with 1.17 million.
The dollar value of the shipments passing through the Port of New York remains the highest in the nation, with $117.8 billion to $101.4 billion for Los Angeles. However, Customs officials said last month it is beyond question that Los Angeles is taking over from New York and predicted that the trend will continue through the 1990s.
In large part, the boom in the Port of Los Angeles reflects the growing importance of Pacific Rim trade and the tremendous population boom in Southern California over the last two decades. Much of the merchandise and material shipped to the port comes from Asia and is intended to satisfy the huge consumer market in Southern California.
However, the port has also developed from a regional point of entry to a major transshipment center. As much as 50% of the goods shipped to the port are transferred to destinations east of the Rocky Mountains, including Europe, said Burts, the port director.
Port officials say a policy of aggressively pursuing opportunities in Pacific Rim trade has helped to push Los Angeles ahead.
A key means of establishing Los Angeles as a major presence in international shipping is frequent trade missions to seek out potential customers and call on existing clients to make sure that their needs are being met, the officials said.
Last week’s trip to Japan and Korea was a pump-priming mission with no specific result expected, they said.
The seven-member delegation consisted of Bradley and an aide from his office, Jeff Matsui; Port Commission Chairman Jun Mori; Commissioner Robert G. Rados; Burts, and two port staff members, Albert B. Fierstine, director of marketing, and Julia T. Nagano, public relations director.
“What I want to leave Korea with is a kind of inside feeling about what some of the important people in this country think is happening to trade, politics and the economy,” Burts said early in the week. “It’s intelligence-gathering, it’s saying, ‘Thank you,’ it’s getting a feel for issues other than shipping . . . the kind of stuff that doesn’t flow back and forth on telexes.”
In Seoul, the group made calls on existing customers as well as some potential ones who now use other West Coast ports, all of which are engaged in tough competition for the lucrative Pacific Rim trade.
In Tokyo, the delegation crossed paths with a group from the Port of Oakland, which was on a similar mission. In marked contrast to Los Angeles, Oakland has been losing its share of the shipping market in recent years, especially in the area of containerized shipping, the chief indicator of standing in international commerce.
Los Angeles port officials said the presence of Bradley on trade missions gives them a secret weapon not available to port representatives from other cities. Bradley’s stature as mayor of the nation’s second-most populous city and now its busiest port opens doors in the Far East that would otherwise be inaccessible, they said.
Bradley’s Role
Bradley attends sessions with government officials and key officials of shipping lines that are major tenants of the port, a gesture that greatly impresses the executives, according to Shuji Nomura, a Japanese native who is the port’s full-time representative in Tokyo.
“This gives the customer the sense that the entire organization of the city of Los Angeles is interested” in his company, Nomura said. Bradley, he said, is thoroughly conversant in the trade issues and actively participates in the meetings.
The presence of Mori, the port commission chairman, also is a substantial asset, Nomura said. Mori, a partner in the Los Angeles office of Kelley, Dreye & Warren, a New York law firm, speaks flawless Japanese, a fact that impresses both government and business officials in Japan, Nomura said.
On Thursday afternoon, both Bradley and Mori were invited to meet with Prime Minister Kaifu, who carved out time for them on what was a highly charged day in Japanese politics. The grounds of the Imperial Palace were closed to visitors and security throughout central Tokyo was extremely tight in anticipation of the arrival Thursday of Korean President Roh Tae Woo. Both Kaifu and Japanese Emperor Akihito met with Roh on Thursday to offer long-anticipated apologies for Japan’s harsh colonial treatment of Korea prior to Japan’s defeat in World War II.
The significance of Bradley’s reception by Kaifu on such a day was not lost on the 150 government and business officials who attended a reception held by the Los Angeles delegation Thursday evening, Nomura said.
The reception at the elegant Imperial Hotel, just across the street from the Imperial Palace, was intended as a grand finale to the mission.
Top officials of Japanese utilities showed up, including Gaishi Hiraiwa, chairman of the Giant Tokyo Electric Power Co. Hiraiwa’s attendance was a particular triumph for Los Angeles, port officials said, and represented a public display by Hiraiwa that he supports the port’s effort to put together a joint venture to export coal to Asian nations.
The port is in an exploratory phase of a project to develop the venture, in which coal companies in the United States, as well as utility companies in Asia, would invest in a bulk-loading facility at the port.
Such a venture would decrease the cost to the port, as well as the financial risk, if the market for coal drops off. The port has been attempting to interest coal-hungry Asian utility companies in such a plan for a decade.
“This meeting tonight, I think, is one of the best indications of how persistence pays off,” Bradley said Thursday. “Ten years ago I was here and we talked about developing a coal terminal. . . . Nobody was willing at that point to make a financial commitment.”
The response was dramatically different on Thursday, Bradley said, adding that he heard strong support for the plan.
Twenty-eight business concerns, including American and Japanese companies, have contributed $25,000 each to conduct a feasibility study. If the firms decide to go ahead with the project, which will require the construction of a new and streamlined bulk-loading facility, it should be in operation within three years, according to Burts, the port director. The port’s current annual export of about 1 million tons of coal could then increase by 10 or 15 times, he said.
Unusual Venture
The venture is unusual because the port normally functions as landlord for its 100 tenants, whose leases range from individual stalls at the fish market to 100-acre container terminals. The joint-venture agreement would make the investors partners with the port, rather than just tenants.
Port officials say their concentration on development of bulk-loading will help to further diversify the port, which also has developed a major cruise ship industry.
The officials in the delegation last week acknowledged that their sales efforts come at significant expense, especially in Japan where the dollar is weak and rooms in the best hotels cost $500 a night. They repeatedly said they feared that newspaper reports would make the trip appear as a lavish junket, although virtually all their time was spent in meetings and business dinners.
They said that the trips, parties and gifts (Japanese officials attending the reception were given key rings from Tiffany & Co.) are the cost of doing business in the Far East.
Although officials could not provide a cost estimate for the trip, Burts said that the Thursday reception cost a minimum of $15,000. It featured women in traditional Japanese costumes who scurried about the room, refilling glasses almost before they were empty, and whisking away used plates.
Elaborate buffet tables were covered with sushi, silver trays of smoked salmon, beef Stroganoff, pasta, pastries and other concoctions. A large ice sculpture of a bird in flight decorated one table. “This is a triple-A party,” said Burts. “If we had to spend $500,000 on one party, it would be worth it, because even one client can bring in $10 million in business.”
