A dramatic increase in the flow of electronic goods, aircraft products and computers across the Pacific last year pushed Los Angeles ahead of longtime rival New York to become the nation's busiest trade hub.
Trade through the Los Angeles Customs District--which includes the ports of Los Angeles and Long Beach, Los Angeles International Airport and airports in Ventura County and Las Vegas--grew last year to more than $145.9 billion, a 13.5% increase over 1993.
That compares to a 2.8% increase for New York's Customs District, which recorded $138.7 billion in trade in 1994, chiefly from the Port of New York; John F. Kennedy International Airport, and airports in Albany, N.Y., and Newark, N.J.
The Port of Long Beach, the nation's No. 1 container port, played a major role in the growth. It handled 29% of the West Coast container trade last year and registered a 24% increase in overall container trade over the previous year.
The region's top ranking reflects a jump in U.S. exports linked to the devaluation of the dollar, the strength of the region's high-technology industries and the continued shift in U.S. trade from an Atlantic orientation to the fast-growing Asia-Pacific countries, according to the authors of a report released Thursday by Claremont McKenna College and TradeWeek, a national trade publication.
Sven Arndt, director of the Lowe Institute for Political Economy at Claremont, said the New York ports depend much more heavily on trade with Europe and Latin America, where economies have not emerged as quickly from the global recession. More recently, fiscal instability in Mexico has taken a toll.
In fact, Arndt noted that despite the North American Free Trade Agreement, trade between the Los Angeles Customs District and Mexico declined slightly in 1994 from the previous year. However, most of Southern California's trade with Mexico moves by truck or train or through the Port of San Diego, which is not included in the Los Angeles district.
"What strikes us the most is how important the Asia-Pacific region is to the L.A. trade scene," Arndt said. "Whatever one would've expected from NAFTA as far as L.A. was concerned, in terms of trade specifics, that's not where the action is."
Nine of the Top 10 trading partners for the Los Angeles Customs District are from the Asia-Pacific region, with Japan, China, Taiwan and Korea heading the list. Germany is 10th.
Port officials said the Southern California region has led New York in volume--as opposed to dollar value--of trade for several years. But they said Thursday's news reflects a shift in the type of products going through the district from lower-priced commodities to value-added, processed goods.
The top three exports from the Los Angeles District last year were electronic integrated circuits, aircraft and spacecraft, and automatic data-processing machines.
Last year, exports from Los Angeles increased 15.6%, while imports increased 12.3%, helping to narrow the nation's $166-billion merchandise trade gap. While the dramatic devaluation of the dollar has increased the price of imported goods, it has also made U.S. products much cheaper for customers in Japan and other Asian countries.
Even Japanese companies with production plants in the United States are dramatically increasing their exports back to Japan and other parts of Asia. Toyota, a major customer for the Port of Long Beach, is now exporting 25,000 U.S.-made vehicles a year to Japan, up from 5,000 just a few years earlier, according to Yvonne Avila, the port's spokeswoman. Still, about 180,000 Toyotas entered the United States through the port.
Long Beach counts most of Asia's top shipping lines among its customers. This month, port officials agreed to construct a $250-million terminal and lease it to South Korea's Hanjin Shipping Co., one of the region's largest shipping companies. Hanjin will pay at least $19 million a year for 15 years to use the terminal.
For Jack Kyser, chief economist for the Economic Development Corp. of Los Angeles County, Thursday's announcement also contained an important message for those who wrote Los Angeles off the trade map after a few years of natural and unnatural disasters. Last year, he sent an angry letter to the editors of Fortune magazine when the city was not included in Forbes' list of Top 10 places to conduct international trade.
He pointed out that the presence of Los Angeles in the national trade picture would be greater if U.S. Customs figures included trade in services, reflecting the increasingly important role played in Asia by Southern California's giant multimedia and entertainment industries.