L.A., Long Beach ports need a rising tide of exports
The ports of Los Angeles and Long Beach, long known as America’s gateway for imported goods, are trying to generate more export business as the international trade sector struggles to regain its sea legs.
The mission is vital for the twin ports and the thousands of people who work on the docks as well as for trucking companies, warehouses and logistics businesses in Southern California: A new report shows that the local ports’ reliance on foreign toys, clothing and other products heightened the region’s economic suffering when the global recession squeezed the flow of imports, while ports with more balanced operations fared better and now are recovering more quickly.
“The ports with a greater focus on exports such as Houston and Fort Lauderdale sustained less of a slowdown” because a weak dollar made U.S. goods more affordable and attractive to foreign buyers, according to a study of the nation’s busiest harbors by Colliers International.
But with 71% of their business devoted to imports, Los Angeles and Long Beach were more dependent on U.S. consumer spending than any other major seaport in the nation. Competing ports such as Oakland had less exposure, with only 52.2% of its traffic coming in imports.
The trade effect can be easily seen in industrial occupancy rates of the Los Angeles Basin, said Thomas Galvin, regional research analyst for Colliers International’s downtown Los Angeles office.
In 2006, when cargo traffic at the local ports peaked at a record 15.8 million containers, the industrial vacancy rate shrank to an extremely tight 3.7%, Galvin said. But by the fourth quarter of 2009, when the twin ports moved only 11.8 million containers in their worst year since 2003, the basin’s industrial vacancy rate climbed to 8.3%, Galvin said.
Businesses that sprang up to support the flood of imports into Southern California, such as trucking firms and third-party logistics companies, wound up shrinking or going out of business.
Local port officials say that they are trying to attract more export business.
“We have people traveling around the country, talking to potential exporters and asking them to bring their business here,” said Art Wong, spokesman for the Port of Long Beach.
The Port of Los Angeles has been trying to educate small businesses about the potential to increase their sales by exporting their goods, said Jim MacLellan, director of trade services.
“We have been to each of the City Council districts and the local chambers of commerce,” MacLellan said, adding that 85% of California businesses have no foreign sales and seem to be unaware that “95% of the world’s consumers are overseas.”
Port of Los Angeles officials, for example, have joined with the mayor’s Office of International Trade, the U.S. Export-Import Bank and the California Centers for International Trade Development to conduct seminars on how to find overseas customers. The meetings have also focused on financing and insurance, and on sea and air cargo services.
But some successful exporters feel pressure as the ports prepare for the next big wave of imports.
Los Angeles Harbor Grain Terminal Inc. in Long Beach just finished a record year, said Howard Wallace, the company’s chief executive. His business “transloads” various grains from clients across the U.S. from railroad cars to cargo containers.
Wallace’s workforce has jumped to 50 employees from 30. He says he could hire 10 more if the Port of Los Angeles gave him more space. Instead, Wallace’s business might have to move to make room for a proposed rail yard that would help the port handle more imports.
“If the port would invest in more space for us,” Wallace said, “we could move business into it immediately.”