Port of Los Angeles Seeks More China Business : Trade: The Asian giant’s exports to the United States are booming, and the harbor agency wants more of the action.
Hoping to reverse a decline in its rate of trade growth, the Port of Los Angeles has targeted China for new import business.
The port, which relies heavily on Pacific Rim imports, is looking to China because Chinese exports to the United States are booming and the port handles a relatively small share of that business.
The value of Chinese exports to the United States has more than doubled over the past four years--to $15.2 billion in 1990 from $6.2 billion in 1987--but in terms of total imports and exports handled at the Port of Los Angeles, China ranked seventh in tonnage in 1989--the most recent year for which a country-by-country breakdown is available. China exported $12 billion worth of goods to the United States in 1989, but only $3.1 billion worth of that business passed through the Port of Los Angeles.
“We’re looking to China because it’s an emerging market for us,” port spokeswoman Julia Nagano said.
The ports of Long Beach, Seattle, Tacoma, Oakland and San Francisco are Los Angeles’ major competitors for trade with China. Considering Southern California’s population and active consumer markets, Los Angeles’ facilities at Wilmington, San Pedro and Terminal Island should be alluring destinations to the Chinese, port officials said.
The port has not fully exploited its advantages, however, through sustained personal contact with the Chinese, who value such ties. To renew old relationships in China, the port has enlisted Los Angeles Mayor Tom Bradley to lead a delegation to China in quest of additional business.
The mayor’s office this week is expected to announce plans for a trade mission to Beijing, Shanghai and Canton early next month.
Port officials said they hope that the delegation will help generate an earnings resurgence. Earnings at the port, the nation’s busiest container-shipping facility, have risen dramatically--to about $81 million in the fiscal year ended June 30, 1991, from $2.5 million in 1975.
However, port earnings in 1991 actually fell by $407,000--a drop of 0.5% from fiscal 1990--largely because the rate of trade expansion has been slowing. Although the amount of cargo handled at the port rose 4.4% in fiscal 1991, average annual tonnage growth was about 8% during the 1980s.
Cargo tonnage is rising less rapidly primarily because consumer demand for imports has been sluggish during the recession. Port officials expect greater annual increases when the economy improves. Ports and the shipping industry generally lag behind other economic sectors during a recovery, however, because companies tend to use up their inventories before they order new merchandise.
Anticipating a slower recovery, port officials have decided to raise shipping tariffs--first in October and again in 1992 and 1993. The port has also taken cost-cutting measures.
Cost-cutting has become fairly common at ports around the country during the recession, said John Terpstra, chairman of the American Assn. of Port Authorities, which represents port managers in the Caribbean and in North and South America.
Terpstra, who is also executive director of the Port of Tacoma, said cargo traffic levels have generally been flat around the country in 1990 and 1991. As a result, port managers have become more forward-looking and are stepping up their marketing programs, Terpstra said.
“About 80% of the cargo from the Far East comes through our Pacific Coast,” he said. “Port managers along the Pacific are very aggressive in seeking new business from that region.”
For West Coast ports, China is a potentially rich market, particularly if it retains most-favored-nation trade status with the United States. Some in Congress charge China with unfair trade practices and want to eliminate the designation, which keeps tariffs on Chinese goods as low as on those of other major trading partners. If the status quo is maintained, China can be expected to export even more goods to the United States.
Most shoes sold in the United States are made in China, as are about 30% of all toys in American stores. Chinese exports of consumer electronics have continued to rise. Also, clothing exports--accounting for about one-quarter of U.S. purchases from China--have been expanding.
Leading Trading Partners
The Port of Los Angeles is seeking additional import business from China. Although China is one of America’s leading trade partners, it has not ranked among the Port of Los Angeles’ top five sources of trade.
Port’s Leading Import Sources (by total tons)
Rank Country Tons Value 1 Japan 3.4 million $17.5 billion 2 Taiwan 1.9 million $ 8.3 billion 3 Thailand 1.1 million $ 1.0 billion 4 Indonesia 952,000 $ 556 million 5 South Korea 907,000 $ 4.3 billion 6 China 652,896 $ 3.1 billion
Leading Export Destinations for Port Goods (by total tons)
Rank Country Tons Value 1 Japan 3.9 million $ 3.6 billion 2 Taiwan 1.6 million $ 1.6 billion 3 South Korea 1.5 million $ 1.1 billion 4 Australia 561,000 $ 1.7 billion 5 Netherlands 536,000 $215 million 11 China 190,799 $187 million
Source: U.S. Census Bureau, 1989
