Cargo traffic rises 8% at Los Angeles and Long Beach ports
Exports weigh down February's figure but the increase is viewed by the ports as a positive sign. Bolstering the economic outlook are vessel purchases by shipping lines.
Cargo traffic at the nation's busiest seaport complex in February fell from its double-digit growth rate for the first time in a year, rising just 8% because of a sudden flattening in the pace of exports, harbor officials said.
The easing of the pace of international trade came amid signs of recovery. Shipping lines are ordering what will be the world's largest-ever cargo vessels, indicating an improved outlook. In addition, companies that lease warehouse space to importers are reporting a brisk increase in business.
Officials at the ports of Los Angeles and Long Beach said they were pleased by the February traffic statistics.
"It's a good sign that we were able to show growth over a February last year when we had a 27% increase," said Phillip Sanfield, spokesman for the Port of Los Angeles. His counterpart at the Port of Long Beach, Art Wong, said: "We were expecting more of a dip, so this is very strong for us."
International trade is a key indicator of the health of the U.S. economy. It's also one of Southern California's most important sources of well-paying blue-collar jobs, employing nearly 440,000 workers in Los Angeles, San Bernardino and Riverside counties.
At the Port of Los Angeles, the nation's busiest for cargo containers, imports rose 3.2% in February, but exports grew just 1.6%. Overall traffic, including empties, increased 5.6% to 554,913 containers in February from a year earlier.
At the Port of Long Beach, which ranks second in the U.S., imports grew 12.4% and exports fell 1%. Overall traffic, including empties, was up 10.9% to 458,336 containers from a year earlier.
Trade experts said the slowdown in exports was causing the nation's trade deficit to widen and hampering job creation during an already weak recovery, but they added that it was too soon to draw conclusions.
The export change comes as the Obama administration is trying to rally American business and agriculture to greatly increase their sales overseas. On Thursday, for example, Agriculture Secretary Tom Vilsack and Long Beach Mayor Bob Foster will be at the Port of Long Beach to highlight the importance of agricultural exports.
"Every billion dollars of trade generates 8,500 jobs. One of every 12 jobs in this country is connected to agriculture, so as you expand those opportunities overseas, you expand job growth," Vilsack said.
The continuing strong growth in imports is boosting the local real estate market, said Lance Ryan, a vice president at Carson-based Watson Land Co., which owns about 15 million square feet of warehouse space, mostly in the South Bay.
During the 2004-07 economic boom, Southern California warehouse space was built with tenants already lined up. As the market deteriorated, warehouses would sit vacant for as long as a year in spite of incentives such as months of free rent, Ryan said.
"Now, those delays in getting space rented have dropped to four to six months and those incentives have been scaled way back" as vacancy rates decline, he said.
Ocean shipping lines appear to be making a big bet on the global economic recovery, including A.P. Moller-Maersk Group, the world's biggest shipping line, which recently ordered 10 ships capable of carrying 18,000 containers.
The ships are "the largest vessels that will be sailing and by far the largest container vessels ever ordered," Chief Executive Nils Smedegaard Andersen said.
ron.white@latimes.com
Exports at L.A. and Long Beach ports are at a near-record pace
Sales growth spurred by demand from a rising middle class in countries including China, India, Indonesia and Malaysia is helping lead the region's rebound, experts say. LAX is on track for an all-time high for outgoing cargo. Southern California's twin ports are on track to post total exports for the year that approach the records set before the global recession, just as the region's preeminent air freight hub ? Los Angeles International Airport ? is on pace to set an all-time high for outgoing cargo.
Those are good signs for the local economy, despite a less robust showing by imports, which account for the bulk of cargo traffic through the ports of Los Angeles and Long Beach. Export-driven sales growth is helping to lead the region's rebound, experts say; overall, international trade provides work for more than 500,000 people in the Southland.
Nationally, the trade deficit narrowed more than anticipated in October, with exports jumping 3.2% and imports declining 0.5%, the Commerce Department said Friday. The trade gap fell to $38.7 billion from a revised $44.6 billion for September, well below analyst estimates for October of $43.6 billion, which suggests stronger U.S. economic growth. California exporters racked up their best October ever, according to Beacon Economics, shipping $12.91 billion in goods abroad during the month, up 16.5% from October 2009 and 1.1% better than the previous high for the month in October 2007.Through October, the L.A. and Long Beach ports have moved 2.8 million export-carrying cargo containers, up 20% from the same period last year. If that pace continues through the end of the year, the two ports will handle about 3.4 million containers, which would rank second only to the 3.5 million moved in 2008. Imports are growing rapidly too, but both ports will fall well short of their 2007 best.
Air freight exports through LAX peaked at 457,899 U.S. tons in 2007, but the pace this year is running nearly 4% ahead of that, according to Jock O'Connell, international trade advisor for Beacon Economics.
Monetary value of exports was higher in 2007, but "the logistics industry makes money by moving weight and volume," O'Connell said. "They make more if the tonnages are going up."
Exporters are selling to new middle-class consumers in China, India, Indonesia, Singapore, Malaysia and other countries, said Ferdinando Guerra, an associate economist at the Los Angeles County Economic Development Corp. who focuses on international trade.
"The middle class in these countries have begun to thrive," Guerra said. "Their countries are not really in recovery because they did not suffer as much as we did in the recession and their consumers are in a much better position overall."
One company looking to peddle even more internationally is Diamond Head Global Corp. of Gardena, a five-employee firm that sells reinforced steel framing and related components as a safe, sturdy home-construction alternative to wood, concrete, adobe or brick.
Chief Executive Darrell M. Sabihon said his biggest sales area has been the Philippines, and now he hopes to include other parts of Asia and earthquake-torn Haiti, where poor construction methods contributed to the massive temblor damage. Sabihon said he was looking to exceed his best year of about $6 million in sales in 2008.
"We're hopeful," he said. "Our products are better and they save a lot of time in construction."
Exports that originate in California are mostly high-value items, O'Connell said. In September, the most recent month for which statistics are available, California exported more than $12.3 billion to foreign markets, an increase of 19% over the year before, through its harbors and airports.
According to a UC Center Sacramento analysis of international trade data from the U.S. Commerce Department, the state's top exports were electrical machinery; industrial machinery and computers; optical, photographic and medical equipment; and aircraft and spacecraft components.
"In terms of sheer tonnage, airborne shipments typically account for no more than 1% or 2% of international trade. So there is no question that seaports do the heavy lifting in international trade. It's just that the cool stuff goes by air," O'Connell said.
With the U.S. economy still sluggish and lingering high unemployment still depressing that buying urge among consumers, exports are expected to help drive the recovery among businesses in Los Angeles and Orange counties, according to a report released last week by the Institute for Economic and Environmental Studies at Cal State Fullerton.
Co-authors Mira Farka and Adrian R. Fleissig said locally based exports would help lead the economic recovery here as the "rock bottom" levels of 2009 have given way to "record growth rates in 2010." Exports, they said, will be up 17.1% in Orange County and by 16.4% in Los Angeles and Long Beach compared with last year.
Although the amount of cargo sent out of Southern California is rising, local exporters still have a long way to go to regain the dollar volume they had before the recession, Fleissig said. After six straight years of gains in regionally based exports, which reached a value of $60 billion in 2008, exports plummeted by nearly 24% to $45.7 billion in 2009.
"We're definitely seeing good growth this year, but it's going to take some time to get back to where we were," Fleissig said. "We should get there by 2012."
Sabihon at Diamond Head Global is counting on it.
"I've got bids out on $50 million of potential business," he said. "We're hoping to get lucky."
EPA Works with U.S. Customs and Border Protection to Enforce the Clean Air Act
WASHINGTON ?The U.S. Environmental Protection Agency (EPA) and the U.S. Customs and Border Protection (CBP) are collaborating to ensure that all imported vehicles and engines comply with the Clean Air Act requirements. In the past year, more than $6.5 million worth of vehicles including motorcycles, dirt bikes, tractors, and generators were imported into the U.S. and found to be in violation of the Clean Air Act, according to EPA records.
“Importing vehicles and engines without proper pollution controls is bad for human health and the environment, and unfair to those companies that play by the rules," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "Americans deserve products with emission controls that comply with our nation’s environmental laws."
“CBP's partnerships with other government agencies and private industry are a critical link in the protection of the American public, the economy, and the environment,?said Don Yando, executive director for Commercial Targeting and Enforcement in CBP’s Office of International Trade. “These partnerships enhance CBP's ability to more effectively focus on those goods that pose the greatest threat.?
CBP officers identify shipments, with particular focus on companies that have previously violated the Clean Air Act, and put them on hold for inspection. EPA investigators, working closely with a special team of CBP officers, inspect the vehicles and engines. Vehicles and engines found to be uncertified are seized by CBP. In a recent seizure, EPA and CBP at the Port of Savannah confiscated illegal off-road motorcycles worth more than $125,000.
The Clean Air Act (CAA) requires most new vehicles and engines imported into the U.S. to have an emissions label and a corresponding EPA certificate of conformity stating that the vehicle or engine meets federal emissions requirements. Ensuring compliance with the CAA is important because it protects US citizens from potentially harmful air emissions. Vehicles and engines emit carbon monoxide, hydrocarbons, and nitrogen oxides that contribute to the formation of ground-level ozone, or smog. Exposure to even low levels of ozone can cause respiratory problems, and repeated exposure can aggravate pre-existing respiratory diseases.
CBP, as the primary federal agency responsible for monitoring importations to the U.S., cooperates with over 40 federal agencies to play a critical role in assisting with the enforcement of U.S. law.
EPA’s mission is to protect human health and the environment. EPA works with other federal agencies to enforce environmental laws.
Drugs Cross Border By Truck, Free Trade And Chance
At the core of the grisly Mexican cartel war, traffickers are fighting over border crossings, the gateways to the world's richest illegal drug market.
In Nuevo Laredo, Mexico, the Gulf Cartel is battling the Zetas for control of the plaza, whose prize is the World Trade Bridge, the biggest commercial port on the southwest border. Each day, 4,800 trucks cross the bridge. That's one truck every 15 seconds. From there, via Interstate 35, it's a straight shot to America's drug-loving heartland.
"By far, not only is it the busiest in the amount of trucks, but it is also the busiest in the narcotics that are seized here each year," says Gene Garza, the longtime Laredo port director for Customs and Border Protection. "We get a lot of tile shipments where we find drugs. We get a lot of furniture with marijuana loads out of [the central-western Mexican state of] Jalisco."
Cleanup crews busy at Port of Long Beach after vessel's oil spill
Cleanup crews were working at the Port of Long Beach on Monday after a vessel’s tanks overflowed during fueling and spilled oil into the water, Coast Guard officials said.
The U.S. Coast Guard responded to the spill shortly after 12 a.m., sending a pollution investigator to the scene, said Petty Officer Matt Schofield, a spokesman for the U.S. Coast Guard.
A cleanup company placed a protective boom around the vessel and spill. The Coast Guard dispatched a helicopter to fly over and assess the spread of the oil, said Schofield, who added that the amount of oil spilled was unknown.
Harbor Commissioners To Meet On Clean Air Plan Update
The Los Angeles and Long Beach boards of Harbor Commissioners will meet on Nov. 22 to consider the 2010 San Pedro Bay Ports Clean Air Action Plan Update.
The original CAAP was adopted in 2006, which the ports designed as a "living document" to be periodically reviewed.
The updated CAAP "sets even more aggressive goals and strategies for reducing air pollution and health risks from the goods transportation industry," according to a statement issued by the port.
The two harbor commissions last met jointly on Oct. 6 to consider the CAAP Update. At that meeting the boards voted to allow for additional public review.
The meeting is scheduled for 2:00pm at Banning’s Landing Community Center, 100 E. Water St., in Wilmington 90744. It will be webcast live at polb.com/webcast. The update, a fact sheet and "Response to Comments" documents can be obtained at cleanairactionplan.org.
The Port of Los Angeles and the Port of Long Beach are the two busiest U.S. seaports, moving $300 billion in trade each year and supporting more than 500,000 jobs in Southern California.
Long Beach Voters Pass Measure D, Long-Term Impact on Port Remains Uncertain
Long Beach voters on Tuesday passed Measure D, a local initiative to amend the City Charter to make it easier for the Council to gain access to port revenues. The vote - 56 percent in favor, 44 percent against - followed a flurry of last-minute campaigning, including mailers from the Pacific Merchant Shipping Association urging a no-vote on the measure and email blasts by Long Beach City Auditor Laura Doud and Councilman Gary DeLong urging voters to say yes. The PMSA said the measure would politicize the port, take money needed for port infrastructure, and make it harder for the Port of Long Beach to compete against other ports. Doud and DeLong said the measure merely created a more transparent, fair and reliable funding method to keep the city's coastal areas clean and safe.
The passage of Measure D marks a bitter defeat for the trade and transportation community, which had closed ranks against the initiative and campaigned to see it defeated.
The Long Beach Chamber of Commerce went on record against the measure. The Harbor Association of Industry and Commerce, the Propeller Club, the L.A. Customs Brokers and Freight Forwarders Association, the PMSA, Future Ports, and the California Marine & Intermodal Transportation System Advisory Council put out a joint press release declaring their opposition to the measure. Former Mayor Eunice Sato penned an OpEd piece calling for rejection of the measure. And PMSA President John McLaurin lambasted the measure in an OpEd Piece in the JOC headlined: Long Beach Dash for Cash.
An analysis of the measure by the State Lands Commission raised serious doubts about the city's role as state trustees. That analysis infuriated Mayor Bob Foster and City Attorney Bob Shannon, who blasted it as unprofessional and inaccurate. But PMSA Vice President Michele Grubbs urged the State Lands Commission to do an independent audit of how the city spent its Tidelands Operations money - a suggestion that further infuriated Foster and Shannon.
The short-term consequences of the vote are fairly clear. The insulation of the port operation from the politics of City Hall has been permanently breached. The bond rating agencies whose reports will be used to determine how expensive it is for the port to borrow money will be taking a close look at the change in circumstance. And port revenues are now up for grabs anytime the city has a new pet project for its Tidelands zone.
The long-term consequences are not nearly so clear.
The trade and transportation community is already fed up with the regulatory uncertainty and high costs of bringing cargo through California. Each new regulation and fee brings with it administrative costs to comply and the risk of inadvertent non-compliance. Despite the geographic advantages offered by West Coast ports and the demographic advantages of California, if there is a choice, shippers may decide to go elsewhere.
The cargo headed for the local market will probably always come through the Southern California ports, but the discretionary cargo - especially the less expensive cargo - may look for other routes. By itself, Measure D is probably not enough to result in diversion of cargo to other ports, but it is one more factor for a shipper to consider when he's choosing what port to ship through.
One could reasonably expect in the future to see the City Council inserting itself more and more into port business. Although the port is a city department, it is also a state trust, beholden to the residents of the entire state and overseen by the State Lands Commission. The financial health of the port and its ability to compete are essential to jobs and businesses across California and beyond, from warehouse and distribution center workers in the Inland Empire, who package and prepare goods to be sent across the nation, to growers in the Central Valley, who depend on the ports to connect to the global market.
Unlike ports in the Pacific Northwest, which are subsidized by taxpayers, the Southern California ports subsidize the cities in which they are located - through transfers of revenue to the City Council to be spent on tideland operations (beaches, marinas, seawalls) or through port payments for police and fire services in addition to what would normally be covered by the taxes paid by port tenants.
As long as port support for local projects and events were kept at reasonable levels, the ports' trusts have been given wide latitude in determining what constitutes proper expenditures of port funds. But, it's during times like these, when cities are struggling to make up lost revenues, that the state begins taking a closer look at exactly how the money is being spent.
As the City Council becomes more aggressive in its demands for port revenues, it begins to invite attention from the state. One result is that the State Lands Commission starts taking a harder line to protect the port and the people of California from future raids by the City Council. This was seen in the recent analysis of the measure.
Another possibility is that as the city uses the port as a piggy bank, it encourages legislators of the cash-strapped state to think about establishing a state-wide port authority that would oversee California's ports - currently operated by cities under state trusts - and allow the state to have access to those revenues.
Following last week's vote, the PMSA issued a statement, expressing disappointment at the outcome and calling it a "deceptive measure that was rushed on to the ballot literally in the dark of night in order the pass."
Councilman DeLong was quoted in LB Report.com following the election, saying the vote showed that while city residents valued the contributions by the port to the local economy, they are also willing to invest in improving the beaches and coastal area. The second thing it showed, he told the LB Report, was don't mess with the city auditor.
Texas-Mexico International Bridges And Border Crossings
According to the Texas Department of Transportation, 13 out of the total 27 border crossings between Texas and Mexico allow commercial traffic, including the World Trade Bridge and the Bridge of the Americas. Both bridges also have dedicated "Free and Secure Trade (FAST) lanes" for trucks carrying commercial products pre-certified by the U.S. Customs and Border Protection's Customs-Trade Partnership Against Terrorism (C-TPAT) program.
The Numbers Game
Truck traffic through Laredo has tripled since the North American Free Trade Agreement (NAFTA) came into force 16 years ago. If customs inspectors examined every truck, it would cripple free trade. Instead, one out of every five trucks is unloaded and inspected. So drug traffickers play the numbers game.
"They're probably thinking ... 'My truck is not gonna get examined. We're gonna go through Laredo to see if we can get through,'" Garza says.
This fiscal year, more than 4.7 million commercial trucks crossed into the U.S. from Mexico. According to the Department of Homeland Security, agents seized 96 tons of marijuana from trucks at southwest ports of entry in 2010, more than twice as much as in 2006. Officials say tougher enforcement in the lonesome stretches between border towns is funneling more contraband through these busy border crossings.