Business Surges at L.A. Ports

Los Angeles ports continued to show strong growth last year, thanks to the strength of Asia trade, but they saw their lead eroded by aggressive East Coast ports that have slashed cargo rates as much as 30%.

Trade through the Los Angeles customs district climbed 15% during the first three quarters of 1996 to $124.2 billion, with Japan and China showing particularly strong growth, according to the latest edition of the CMC TradeWeek Regional Trade Report, a joint production of Claremont McKenna College and TradeWeek.

But while Los Angeles remains the nation’s busiest customs district--a distinction it attained in 1994--the Port of New York narrowed the gap during that same period, expanding its business by 24.7% to $115.4 billion.

And in the fourth quarter of 1995, New York actually won back the No. 1 spot, shipping $57 billion in goods, compared with the $55.8 billion handled by Los Angeles.

Due to its location at the intersection of Asia, Latin America and the United States, shorter shipping times and efficient port facilities, Southern California will continue to land a major share of Asia trade, according to Sven Arndt, an economics professor at Claremont McKenna.

But as demonstrated by last year’s figures, the ports cannot afford to be complacent, Arndt warned. He said East Coast ports such as New York, Baltimore and Boston have dropped their cargo rates by as much as 30%, which can be enough to cause shippers to shift business through Canada, Mexico or via the Suez Canal to the East Coast.

“The new element here is how the two coasts and port districts compete with each other,” he said.

The East Coast, once the nation’s premier shipping center, suffered a steep decline in the 1970s and ‘80s as the region’s manufacturing base shrank and U.S. companies shifted their sights to Asia. Modernization of the ports and deregulation of the transportation industry also made it easier to shift cargo to the cheapest and fastest route.

But East Coast ports have begun fighting back, upgrading their facilities and negotiating cheaper labor contracts.

The West Coast also suffered recent setbacks in its labor relations. The International Longshoremen’s and Warehousemen’s Union, unhappy over a new contact and fearful of job loss due to port modernization, launched work slowdowns last year that raised costs and scared away business, according to a study by the Pacific Maritime Assn., the waterfront employers group.

On Monday, the ILWU flexed its collective muscle again with a one-day work stoppage that idled dozens of cargo ships in West Coast ports and cost steamship lines millions of dollars in extra fees. The union dockworkers were showing support for striking longshoremen in Liverpool, England. However, the East Coast unions did not follow suit.

The CMC-TradeWeek report also showed that the U.S. efforts to trim its bilateral trade deficit with Japan got a boost during 1996, partially due to the strengthening of the yen, which raised the cost of Japanese products here and lowered the price of U.S. goods in Japan. While the yen has weakened in recent months, it has not yet had an impact on trade figures.

During the first three quarters of 1996, U.S. exports to Japan through Los Angeles ports jumped nearly 16% to $12.1 billion, while imports fell 4.1% to $21.6 billion.

But the U.S. deficit with mainland China widened over the same period, thanks to the voracious U.S. appetite for Chinese textiles and apparel, toys and electronic goods. Trade through the Los Angeles custom’s district with China expanded nearly 21% to $15.1 billion during the first three quarters of last year.

Evelyn Iritani can be reached via e-mail at [email protected] or by fax at (213) 237-7837.