This Ship Has Come In : Long Beach Steams Past L.A. to Become Nation’s No. 1 Port

It’s another hectic morning at the Port of Long Beach, a place where nearly 300 huge, cargo-jammed containers change hands every hour--more than any other port in the nation.

Huge gantry cranes hover over docked ships like predatory insects, their cargo hooks skimming the decks or sinking deep into ships’ holds, snatching up the 40-ton containers and sending them on their way.

There’s not a minute to lose. The big container ships are racking up charges of $90,000 a day for use of the docks, and customers are clamoring for their goods.

“Promptness is the name of the game,” says Don Wylie, the port’s director of trade and maritime services. “If you’re two hours late two weeks in a row, you’ve lost yourself a customer.”

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The bustling Port of Long Beach has used its ability to handle huge volumes of cargo promptly--as well as its good fortune to have some of the fastest-growing steamship companies in the world as its tenants--to establish itself as one of the world’s major cargo centers.

Last year, Long Beach overtook Los Angeles as the nation’s top container port. The equivalent of 2.57 million 20-foot containers--known in the industry as TEUs, or 20-foot-equivalent units--crossed the Long Beach wharves in 1994, about 55,000 more than their next-door rivals.

The Long Beach facility now ranks ninth in the world. When the two Los Angeles-area ports are combined, they are third behind the mega-container ports of Hong King and Singapore.

Trade analysts say Long Beach was the crucial factor in a boom in West Coast trade which saw the Los Angeles area overtake New York as the nation’s busiest trading center. According to Los Angeles Customs District figures, trade volume worth more than $145.9 billion went through the region last year, compared to New York’s $138.7 billion.

Long Beach’s big advantage is, of course, its front-row seat on the Pacific Rim--or, as port officials say, appropriating a real estate maxim, “location, location, location.”

The port, along with the Port of Los Angeles, happens to be smack in the middle of the West Coast’s major market just when Asian countries are maturing as trading partners. “We’re simply on the right ocean,” says port spokeswoman Yvonne Avila.

The location maxim also applies to the transportation infrastructure that feeds the port, suggests Paul Laing, vice president for Long Beach-based Hanjin Shipping.

“You’ve got a large consumer market here,” he says, “and you’ve got a gateway for intermodal traffic (where cargo is moved from ships to trucks or trains) for delivery to other parts of the U.S.”

But the Port of Long Beach has also benefited from smart, aggressive management that has responded quickly to new developments, experts say.

The port long promoted itself as “the world’s most modern port,” a title reportedly bestowed upon it by Greek shipping magnate Aristotle Onassis in the 1950s. Though some European ports are now in the vanguard in terms of experimenting with robotics, Long Beach has pioneered other innovations such as dockside railroad tracks.

“There are very good reasons for it to maintain the moniker (of most modern port),” says Tom Teofilo, president of the Greater Los Angeles World Trade Assn. and director of the Long Beach Export Development Office.

Officials say they run the port, which is a proprietary department of the City of Long Beach, like a commercial real estate development company. The port, with a total staff of less than 300, provides the space, and the tenants move the cargo.

The idea is to keep things lean and adaptable to changing conditions, leaving maintenance and other functions in the hands of its tenants, Wylie says. “We operate as if we were in the business of designing, building and leasing marine terminals,” he says.

The approach works. In January, a management consultant firm criticized the Port of Los Angeles’ bloated staff and leisurely operating style, citing Long Beach as a model to emulate. Los Angeles has more than twice as many employees, and it is only about two-thirds as productive, says the report by Booz-Allen & Hamilton.

The firm also faulted Los Angeles--which, like the Port of Long Beach, is administered by a board of commissioners appointed by the mayor--for being mired in city bureaucracy. “Little or no autonomy (for the port) from the City of Los Angeles allows the city’s bureaucracy to envelope the port--at considerable cost,” the report said.

Long Beach has some problems of its own, of course. Environmental groups, including Heal the Bay, are suing the port, alleging that it allows its tenants to release toxic and carcinogenic pollutants such as petroleum products and pesticides into San Pedro Bay--which the port denies.

And there is ongoing tension between the port and Long Beach municipal budget writers, who have struggled to make ends meet in the midst of some devastating economic setbacks.

Douglas Aircraft Co., the city’s major employer, has laid off 30,000 people since 1990, and the Navy closed down the Long Beach Naval Station last year. Just six weeks ago, the Defense Department placed the Long Beach Naval Shipyard, which employs 3,100, on a list of facilities targeted for closure.

“When people in City Hall look out the window at the port and almost weekly they’re reading glowing reports about the great business there, it’s mighty hard for City Council people not to think, ‘Gee, why not get some money from the port,’ ” says David L. Hauser, a member of the five-person Harbor Commission.

The Long Beach City Charter allows the city to appropriate up to 10% of the port’s annual profits--a direct cash transfer that is expected to be about $5.5 million this year.

But even without skimming its profits, the city gets substantial benefits from the port. The port pays for its own police and fire protection, about $6 million a year, and generates $2.6 million in taxes from its tenants. The port has also chipped in millions of dollars for such projects as expanding the city’s Convention Center and improving the Queen Mary.

More important, the ports of Long Beach and Los Angeles together generate an impressive $39 billion in direct and indirect business revenue in the region while receiving no tax support, according to one study.

“Most people wish the rest of the city worked like the port,” says Long Beach City Councilman Alan Lowenthal, whose district encompasses the port.

The shipping industry has undergone a revolution since Malcolm McLean, the founder ofSea-Land Service, got the notion in 1956 of setting up ramps between ships and docks so that trucks could drive their trailers aboard.

The idea eventually transformed the system of cargo handling, from bucket brigades of longshoremen--hauling bunches of bananas, sacks of flour and wooden crates--to 100-foot-tall dockside cranes hoisting jumbo sealed cargo boxes weighing more than 40 tons (or about 36 metric tons, to use the standard unit of measurement in shipping).

This “containerization” reduced labor and insurance costs, almost eliminated pilferage and transformed the world’s ports.

With the new way of transporting cargo came new demands for spacious wharves to stow those long rows of containers. And there were new technological and infrastructural requirements. Nowadays, modern ports must have on-dock cranes, rail and airport connections and access to freeways, as well as broad new terminals, port experts say.

“It takes vast sums of money to keep up with the trade,” says Jim McJunkin, a former Long Beach port director who now works as a maritime consultant. “Hold back and you lose.”

If anything, the demands of shippers and steamship companies are increasing, port officials say. In the next two years, Long Beach starts receiving the next generation of container vessels--aircraft-carrier-sized ships that can carry 5,000 TEUs--requiring larger cranes and longer berths.

Competition among the steamship lines is keeping the heat on for technological advancement. Some shippers are now requiring “just-in-time” deliveries--not so early that goods will have to be warehoused and not so late that production lines will be slowed down.

“Ten years ago, it was good enough to say a vessel was arriving on Tuesday,” Wylie says. “Now, they specify 9:08 a.m. on Tuesday.”

McJunkin cites New York (Manhattan, that is), San Francisco and New Orleans as ports which have faded from their pre-container preeminence either because of lack of room to expand or failure to keep up with competition.

Long Beach, on the other hand, has been able to respond to new developments because of increasing profits, he says. “They’ve been willing to build the facilities and they’ve had the capital to do so,” McJunkin says.

“Things are changing so rapidly (in the shipping industry),” says Sven Arndt, director of the Lowe Institute for Political Economy in trade in the Los Angeles region. “Like everybody else, ports and port authorities have to be more flexible. Long Beach does that very well.”

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On this day, six big container ships--each longer than three football fields and carrying up to 3,700 TEUs above and below deck--are already moored to the docks in the port’s Southeast Basin.

The cranes haul away anything from Chilean fruit to Japanese electronics, substituting beef, oranges, waste paper, lumber and dozens of other goods for the return voyage. A 40-foot steel container--eight feet tall and eight feet wide--can hold 3,400 VCRs or 10,000 boxed shirts.

Other ships are anchored in the harbor, awaiting dock space.

“It’s kind of like a large-scale holding pattern with those babies out there,” says Phil Feldhus, operations manager for International Transportation Service, glancing edgily toward the waiting ships. “Except they throw anchor instead of circling the airport.”

At the same time, hundreds of big trucking rigs are lined up at the terminal gates, waiting to transfer containers from the vessels to railroad yards miles away.

But on the ITS pier, a recent innovation is at work: Zippy little utility tractors are rushing containers, one at a time, from K Line’s Bosporus Bridge--a vessel just in from the Far East--directly to a mile-long freight train due to depart for the Deep South in six hours.

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Long Beach was the first port on the West Coast to bring dockside rail service to its tenants, permitting the direct transfer of containers to freight trains. In doing so, the containers skip an extra jaunt, via semitrailer, up the Terminal Island or Long Beach freeways to the big railroad yards in Carson and Los Angeles.

Though it is less than 20 miles from the docks to the rail yards, that extra step to deliver containers to the trains can cause significant delays, says Laing of Hanjin Shipping. The South Korean steamship line will have its own dockside rail spur when it moves into a new terminal in two years, Laing says.

“It should take a day off of the delivery time to the East Coast,” he says. “A day--that’s a significant amount of time in our business.”

ITS, a wholly-owned subsidiary of K Line, got its own rail connection in 1985. Three other terminals followed, providing the service for, among others, Maersk Line, Sea-Land Service, China Ocean Shipping Co. and Zim Container Service.

By contrast, the Port of Los Angeles has yet to provide any of its tenants with the service, though American Presidents Line’s new terminal with direct rail connections is scheduled to open in 1997, a spokeswoman said.

Dockside rail has cost the Port of Long Beach about $6 million per terminal, says Long Beach Executive Director Steve R. Dillenbeck. “If it (hadn’t worked), we’re out a lot of money,” he says. “But it’s been better than anybody anticipated.”

Long Beach also boasts that 19 of its 38 cranes are big enough to handle the so-called “post-Panamax” ships, the new generation of container vessels which are too big to fit in the Panama Canal.

“Cranes have to be big enough to reach across 16 rows of boxes,” Avila says.

Everything seems to be going Long Beach’s way these days.

Some of its tenants--particularly those with connections to Japan, China and South Korea--have even cut back at other West Coast ports to increase their volume in Long Beach.

“It’s like the old adage that it takes money to make money,” said an executive with one of Long Beach’s largest shipping companies, who asked that his name not be used. “It takes cargo to generate cargo, too.”

Because of heavy bookings into Long Beach, the port has become the first stop on the shipping circuits between the Far East and the West Coast, providing faster connections to the Midwest and the East Coast and generating even more cargo. The first stop has a built-in advantage over other ports.

“So where do you ship to--Seattle, which is the third port down the string, or Long Beach, where the transit time is three or four days shorter?” the executive asked.

Last year, Long Beach and Los Angeles estimated that cargo volume coming across their wharves will more than double by the year 2020--an estimate that now seems ridiculously conservative for Long Beach, officials say.

“At current rates, we’ll double our volume by the end of the century,” Avila says.

Not even the recession of the early 1990s could slow the flow of cargo through the port, as Long Beach-based steamship companies continued to expand their services.

For example, Hanjin has increased its cargo volume by 250% since 1991. “It was a very conscious growth effort on our part,” Laing says. “And, frankly, we’re good.”

Because of Hanjin’s explosive growth, the port has agreed to construct a new 170-acre terminal for the company, which has outgrown its current 57-acre terminal. Hanjin will lease the new terminal, which will cost $250 million, for about $19 million a year.

“We’re always altering, expanding, changing,” Dillenbeck says. “We’ve reconfigured seven out of eight terminals.”

In fact, the port is in the midst of a wide-ranging $1.25-billion capital improvement program--$900 million this year alone. The projects include land purchases and landfills, as well as truck overpasses and new railroad tracks to speed the flow of cargo.

When parallel rail spurs are installed to each terminal in the next two years, trains will be able to exit and enter the port at the same time, port officials say.

The one big capital project that still awaits funding is the proposed $1.8-billion Alameda Corridor, a project to provide a direct link along Alameda Street between the ports of Long Beach and Los Angeles and the rail yards. Though the two ports have already fed $400 million into it, the proposed corridor faces new hurdles in the Republican-controlled Congress, where there have been moves to take back funds appropriated for it.

Port officials say the 20-mile rail and truck route would significantly speed cargo to and from the ports and cut truck traffic on freeways. Every freight train that loads up on the docks eliminates as many as 1,000 truck trips, they say.

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By late afternoon, the Bosporus Bridge is almost ready to depart for Oakland, the next leg of its circuitous voyage, which will take it back to Japan, Taiwan and Hong Kong. The ship is loaded rail-to-rail with steel boxes, six-high on deck (the top ones empty) and eight-deep below.

In the past 48 hours, ITS’ big cranes have moved more than 3,000 boxes on and off the vessel. There are toys, electronic components, Christmas decorations, bicycles and a myriad of other goodies for American consumers, and there are lumber, lubricating oil, eggs, cotton, hay and waste paper (to be transformed into boxes for those electronic components) for Asia.

Because of delays from rough seas and backups in Japan associated with the Kobe earthquake, the ship is more than 24 hours behind schedule, says Jay Perry, assistant director of marine operations for ITS.

Captain Yasuhiro Kisoda, a slim, good-humored man, and his crew of 25 are impatient for the open sea. It’s time to shove off. There’s not a minute to lose.

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Port of Long Beach

The Port of Long Beach has made the most of its prime location on the Pacific Rim, surpassing the oft-criticized Port of Los Angeles to become the nation’s top container port. The Long Beach facility was the key factor in making the Los Angeles area the leading U.S. trading center last year, displacing New York.

Total Tonnage: Metric tons moved through the Port of Long Beach.

Value: Value of foreign shipments in billions dollars.

Comparing Ports: Number of containers in millions:

Long Beach (1994): 2,573,827

Los Angeles (1994): 2,518,618

Source: Port of Long Beach