Export surge helps keep L.A.-Long Beach on top
The ports of Los Angeles and Long Beach remained the nation’s busiest seaport complex for cargo containers in 2007, even though they saw a decline in traffic for the first time in at least 20 years. But in a shift, exports grew as the dollar’s declining value helped U.S. companies ride into new markets and to record-breaking sales.
One of those benefiting was Los Angeles Grain Terminal in Long Beach, a 49-year-old company that packs cargo containers with grain from the Midwest for sale in Asia. A year ago, the company was running a single work shift five days a week with about 20 employees. Now it is running two full-time shifts with 35 workers on the job six days a week.
“We are absolutely at capacity as far as loading goes. The dollar has fallen and American agricultural products are a bargain in the world. All of a sudden, there was this huge demand,” said company President Howard Wallace.
The company added customers in Indonesia, the Philippines and Vietnam and had strong sales in Japan, South Korea and Taiwan, he said.
Experts say the export surge is a clear sign of the reversal of fortunes that comes with a slowing economy, increasingly cautious consumers, tighter credit due to the real estate slowdown and a weak dollar. Compared with 2006, boxed imports through the two ports in 2007 remained flat at 8.1 million containers while exports grew by more than 18%, to 3.2 million containers from 2.7 million.
Overall, the ports moved 15.7 million containers in 2007, down 100,000 from 2006. The other big change was a reduction in the number of empty containers shipped back to Asia. With imports slowing, there was simply no rush to send them back.
“When the U.S. economy is growing more slowly relative to foreign economies, this is what you see,” said Jerry Nickelsburg, an economist with the UCLA Anderson Forecast. “That export growth is one of the strengths of the U.S. economy right now.”
“Our sales are easily up 100% over the past year,” said Brad Heier, president of San Juan Capistrano-based Globe Runners Inc., another company involved in moving agricultural goods to Asia, mostly grain and soybeans. The boom came in the last half of 2007, Heier said -- thanks to China.
“We were not doing a lot of business there before, but they have an economy that’s growing, and what we ship out is needed to feed them,” he said.
Although the rise in exports has boosted a few local companies, experts say the Southern California ports overall won’t see employment growth until imports pick up again.
“It hurts Southern California because we have so much of a logistics base built around moving those imports on to the rest of the nation,” said John Husing, an economist who follows the goods transport industry.
Finished goods such as furniture, apparel, toys and electronics are the biggest categories of imported goods. U.S. exports tend to be lower-value goods such as wastepaper, fabrics, cotton, animal feed and scrap metal, said Geraldine Knatz, executive director of the Port of Los Angeles.
Nathan Frankel, owner and president of Fontana-based Advanced Steel Recovery Inc., patented a machine that breaks scrap metal down into a form that is easily loaded onto cargo containers.
“Our invention has allowed us to take advantage of the demand from developing nations, and we have an unencumbered supply. We have doubled the tonnage we moved in 2006,” Frankel said.
Experts expect more of the same this year.
“This will be a year of sluggish economic growth, with recovery and more normal growth next year. And we’re not seeing the dollar gain in value significantly in the near future,” UCLA’s Nickelsburg said.
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