Record Volume at Local Ports Creating Worries

After posting record trade volume last year, the Port of Los Angeles, the nation’s second-busiest commercial harbor, got off to a fast start in January, logging record-high cargo levels for the month, most notably a 41% increase in imports, port officials said Tuesday.

But the stellar trade numbers out of Los Angeles and neighboring Port of Long Beach, the nation’s No. 1 port, are causing concern among importers. They worry that the country’s antiquated customs computer system, responsible for processing all trade crossing U.S. borders, may have difficulty handling the ever-increasing cargo volume.

Such concerns took on added urgency recently when the U.S. Customs Service put on hold efforts to develop a new $1.5-billion computer system. The move not only delays the implementation of a new system, but may hamper efficient movement of goods into and out of the country as the old system struggles to keep up.

Customs officials have estimated it will take four years to develop the new system. At the same time, the total volume of trade is expected to explode from $1 trillion of goods last year to $1.8 trillion in 2005.

January figures from the Port of Los Angeles appear to indicate that growth is already well underway. Last month, the port handled the equivalent of 358,235 20-foot cargo containers, an increase of more than 89,000 units over a year ago. Imports lead the way with a 54,000-container jump. Even exports, which had been down because of Asia’s economic turmoil, were up by more than 16,000 units.

Long Beach port posted record volume for 1999 and is expected this week to post strong January figures.

The increase has proved taxing to the 17-year-old customs computer system known as ACS, which each day processes an estimated 30,000 requests to clear import cargo, among its other functions at the nation’s 301 ports of entry.

Even after millions of dollars in upgrades last year, the system suffered a minor crash in September causing delays and backlogs in import and export shipments, U.S. Customs Commissioner Raymond Kelly said Tuesday.

Last year, the Customs Service earmarked about $3 million to begin preparing a request for contractors to bid on the development of a replacement for ACS. But Kelly said he had to stop the process last month after funding ran out and his agency failed to win supplemental funds from its parent agency, the Treasury Department.

Kelly estimated the cost to finish the bidding process and award the contract at $25 million. He added that congressional restrictions are preventing him from using other agency funds to keep the process going.

Robin Lanier, who heads up the Los Angeles-based Coalition for Customs Automation Funding, a group of importers, retailers and other trade-related businesses, called Kelly’s move a political ploy to pressure Congress into allocating more money to his agency. “It’s political. He’s playing a big game of chicken,” Lanier said.

Kelly denied the claim. “We didn’t have the money to spend on it, it’s as simple as that,” he said.

But regardless of the reason, plans for the new system have been shelved for now.

In the meantime, local importers such as Nissan North America Inc. have resigned themselves to the “Band-aiding” of the current system, which this year has been assigned about $65 million for maintenance. Congress is currently weighing a proposed maintenance budget of $61 million for next year.

Nissan North America has had to continue delaying its own computer system upgrades because company officials don’t want to gear their improvements to the current system and then have to redo that work once the new system is on line. “That [would] be like throwing money out the window,” said Leslie Cazas, Nissan’s corporate customs manager.