Ports push expansion despite rocky economy
Union dockworkers are finding there isn’t enough work to go around. Big cargo ships are joining the ranks of the unemployed. And yet, the people who run the nation’s two largest container ports are convinced that now is the time to build for the future.
And they’re bracing for lots of objections.
Los Angeles and Long Beach port officials see the signs of retrenchment in the shipping industry. The global economic downturn has cut the rates that some ships charge to carry cargo to less than $600 per 40-foot container from as much as $3,400 in 2007. Outside some of the world’s busiest harbors -- Singapore, Hong Kong and Shanghai -- dozens of cargo vessels are idled with no goods to carry.
At the Port of Los Angeles, 7.3 million containers moved across the docks from January through November, down more than 5%.
The drop was bigger in Long Beach, with 6 million containers moving through the port, down about 10%.
Still, after stalling for several years, some projects are reaching crucial stages, and the ports’ directors say it’s time to push them through.
The more than $2 billion in projects in their capital improvement plans, officials say, would amount to an important economic stimulus package that would employ thousands of regional workers. The projects, they contend, would reduce the pollution endured by neighbors by using newer, greener technologies.
The developments also would help prepare the harbor for when the global economy gets hot again. Port officials note that the harbor was unprepared for the boom that started in 2004, and that made the pollution even worse as ships idled their diesel engines offshore for as long as a week, waiting to be unloaded.
“After years of robust growth, we have a chance to take a breath and concentrate on some infrastructure projects,” said Richard Steinke, executive director of the Port of Long Beach. “We can stimulate economic growth, put people back to work and position ourselves for the turnaround.”
With a slate of important projects, including the replacement of a cruise ship terminal that dates from the Kennedy administration, inching toward approval, Steinke’s Los Angeles counterpart said she realized that this was a difficult time to move ahead.
“We are trying to implement the most far-reaching improvements ever, and we are trying to do that in a down year, with 2009 looking even worse. That makes it really tough,” said Geraldine Knatz, executive director of the L.A. port.
One of her most ambitious projects stems from the fact that the nation’s busiest cargo port has devoted so much to blue-collar big-box work that its cruise facilities are considered to have a high “ick” factor among the passengers who embark and debark there.
The early 1960s-era facility sits by a narrow channel “in an area filled with cranes and tankers and oily discharge. Passengers have nothing but a long wait of ugliness while they are there, breathing in continuous diesel fumes,” said Judy Parker, vice president of sales and marketing for Worldview Travel, a travel agency with offices in California, Florida and New York.
Perhaps worse, the biggest cruise ships find the space so tight that they have to reach the terminal by backing up.
Parker is convinced that the cramped, unfriendly surroundings are part of why Los Angeles has lost cruise business. According to the Cruise Lines International Assn., Los Angeles ranks a distant fourth in the U.S. with only a 6% share of cruise embarkations.
“People have this image of how their ship will arrive in port, the wind in your hair, streamers flying, maybe a bottle of champagne, and here in Los Angeles you arrive creeping along in reverse. It’s pretty hard to put your best face forward that way,” Parker said.
Knatz said building a new cruise terminal in the port’s Outer Harbor will “allow us to minimize risk in handling the largest cruise ships” while creating more than 7,300 direct jobs and 17,700 indirect construction-related ones during the five- to seven-year building period. An additional 438 permanent jobs would be created at the facility while reducing pollution emissions.
One of Long Beach’s biggest undertakings is a 10-year, $750-million project that would combine two terminals that are too old, inefficient and dirty to meet the port’s goals for pollution reduction and greater productivity.
It would be the second-most-expensive development in the history of the No. 2 container port, largely because of measures proposed in the face of threatened lawsuits to force Long Beach and Los Angeles to clean up emissions tied to higher rates of asthma and cancer.
Vessels would have to be able to plug into the electrical grid through a shore side connection and turn off their auxiliary diesel engines. The terminal equipment that moves and stacks cargo containers would have to operate on the cleanest energy. As planned, Middle Harbor would be permitted to emit no more than half of current pollution levels.
“It’s an opportunity for us to provide for green growth by taking trucks off the road and reducing emissions even as we put people back to work,” Steinke said.
The projects at both ports are being fought by environmentalists and neighbors concerned about premature deaths and a higher incidence of asthma.
Jesse N. Marquez, executive director of the Wilmington-based Coalition for a Safe Environment, said the ports’ expansion projects weren’t very green or forward-thinking. Both ports should be exploring the ability to load containers directly onto zero-pollution maglev trains that move on magnetic fields, he said.
“They’re not modernizing at all,” said Marquez, who lives four blocks from the Port of Los Angeles’ Trapac container terminal.
Further complicating the expansion picture: Both are landlord ports that derive their income from the rent their terminal operators and shipping lines pay. And more of those businesses are cutting back.
Denmark-based A.P. Moller-Maersk, for example, not only is the world’s biggest shipping line, it is the single biggest contributor to cargo business at the Port of Los Angeles. The company recently decided to pull most of its business from Tacoma, Wash., and some from Los Angeles while consolidating its operations in Seattle.
“We will have to determine what the overall impact will be, but Maersk is big in our overall volume numbers,” Knatz said. “We will have to be judicious about our spending. It’s not the best time to be trying to spend money.”
But some maritime experts say that the two ports and their communities would be best served by trying to forge ahead.
“These ports will have to become much cleaner and much more efficient in order to compete effectively, otherwise they will lose more business, and they have already lost some to Canada and Mexico and the Panama Canal,” said Asar Ashaf, head of the Washington, D.C., office of the University of New Orleans’ National Ports and Waterways Institute.
John Husing, an Inland Empire economist who specializes in goods movement, said the U.S. economy “won’t be down forever and global trade will come back. A lot of that trade will still enter the West Coast in spite of new competition.”
“Getting ready for that now, in a way that sharply reduces pollution, just makes good sense.”