Port Issues Go Far Beyond Labor Dispute

The issues and challenges facing international trade in Southern California go far beyond the shipping lines and dockworkers squaring off at the bargaining table this weekend.

The Los Angeles-Long Beach port complex is a key link in the global economy. And it’s a cornerstone of Southern California’s largest industry--international trade, which accounts for an estimated 450,000 jobs in the region.

But the ports are challenged. Unless they modernize, the great trade-based industry that has grown up here--with $220 billion of goods moving through Los Angeles-Long Beach this year--will seize up within a few years. Diminishing returns will set in, business will go elsewhere or not be done, and a region’s destiny will be denied.

Moreover, shipping line managers and labor leaders are not the only parties with major stakes in the matter. The communities adjacent to the ports have major grievances about pollution and disruption from the ports’ outdated operations, including long lines of backed-up trucks. Those communities will pass laws aimed at correcting problems and extending the ports’ working hours to relieve congestion.

The ports’ customers--major retailers and automobile companies, and other businesses that rely on the ports for their products and livelihoods--are fed up with the lack of efficient service. And those customers also will have a say in the ports’ future operations.

The economies of California, the United States and Asian and Latin American countries have major stakes in the future of the West Coast ports. Ultimately, national and international forces will determine the future of trade

in Southern California.

To understand what must be done to improve such vital assets, it’s a good idea to look at all that has been done in recent decades.

Tens of billions of dollars in federal- and state-financed capital expenditures on waterways, docks and cranes and rail links such as the Alameda Corridor have transformed local import-export operations into a cog in the massive production and distribution system that extends from factories in Asia to the shelves of Wal-Mart, Target and Home Depot stores and the auto plants in Tennessee, Indiana and Michigan.

The ports have become critical. If they were to be shut by a strike in coming weeks--which undoubtedly they won’t be for many reasons--that could spark a “crisis in Asian currencies and U.S. financial markets,” says economist Stephen Cohen, a trade expert at UC Berkeley.

Yet for all their importance and the public money spent on them, the ports continue to be operated like a lemonade stand. Companies that have operations around the world say the Los Angeles-Long Beach ports are way behind those of Asia and Europe.

In Southern California’s ports, computerization is antediluvian. Clerks manually reenter computerized information from other parts of the world.

And terminals bid a little extra in cash payments to get the best union crane operators and stevedore crews to work their vessels.

In a 24-hour world, the Los Angeles and Long Beach ports work an eight-hour day, causing congestion on highways and delays in goods delivery.

Customers are denied basic information about the time or even date of delivery of their shipments.

“Why is it that FedEx and UPS can give me the location of the tiniest package, but I can’t be told the location of a 20-foot container?” says a warehouse operator who asked not to be named for fear of the union.

“It is very frustrating to be sending trucks to wait hours at the ports with no certainty of delivery times,” says Charles Woo, head of Megatoys Inc., an importing firm that helped spark the growth of a major toy industry in Southern California.

Incredibly, both the shipping lines that own the terminals and the unions that operate them disclaim responsibility for the congestion caused trucks waiting at portside and for the resulting delays and pollution.

The attitude is galling to neighboring communities.

“They think they own the coast, but they don’t. They only rent it,” says Richard Hollingsworth, president of the Gateway Cities Partnership, an economic development effort of 27 cities in the vicinity of the Long Beach and Los Angeles ports, including Long Beach, South Gate and Lakewood.

Such amateur operations cannot continue.

“If the Los Angeles-Long Beach ports continue to operate as they’re now doing, they will run out of capacity in three to four years,” says John Vickerman, president of Transystems Corp., a firm that designs port facilities nationwide.

More to the point, such operations won’t be allowed to continue. Assemblyman Alan Lowenthal (D-Long Beach) has introduced a bill that would impose penalties on trucks that wait in line too long at the ports, with idling engines polluting the air. The bill, almost certain to be passed, would demand appointments for trucks to pick up and deliver their cargoes.

Federal legislation on homeland security, which is even more sure of passage, would require identification cards for all transportation workers, including truckers. Security legislation would change the ways trucks, gates and terminals are administered at the ports.

Other solutions are emerging from discussions in the last four years under the auspices of the Center for International Trade and Transportation at Cal State Long Beach. Marianne Venieris, head of the center, has brought together unions, terminal owners, trucking and warehouse companies, community representatives and other stakeholders in the trade industry. Some sensible changes have been suggested.

Longer hours probably will be implemented, although the ports won’t go to a round-the-clock operation soon because of objections from neighboring communities. However, additional shifts from 3 to 8 a.m., or 6 to 10 p.m., are being considered for the ports as well as warehouses throughout the South Bay. Such non-peak work would relieve congestion on roads and freeways, particularly the badly overloaded Long Beach Freeway.

For all the rhetoric about technology in the current labor negotiations, information systems undoubtedly will be upgraded at the ports--with a strong union say in their operation. International Longshore and Warehouse Union President James Spinosa and other union officials have been receiving counseling from Vickerman of Transystems on the implications of technological advances.

The ILWU is a union with a tradition of adapting to technology. Legendary ILWU leader Harry Bridges made a landmark agreement in 1960 that allowed containers at West Coast ports, predicting--against the opinions of most members--that technological advances would lead to expansion of trade and more jobs. And Bridges was right.

Today the Los Angeles-Long Beach trade complex could be at the dawn of new decades of headlong growth. Port administrators project 5% to 6% growth of business, and Vickerman predicts a quadrupling of trade through the two ports by 2020.

Such projections assume that the world economy keeps growing and the U.S. continues as the prime market for most of the world.

And the projections correctly assume there won’t be a ruinous strike in the coming weeks. Neither union nor management is talking about a strike or a lockout. The shipping lines can’t afford to have ships idle. The retail concerns want the goods for the fall and holiday shopping seasons. And because of the economic importance of the Los Angeles-Long Beach trade complex, the U.S. government almost certainly would step in to impose mediation.

Southern California in a decade or two has become one of the world’s great port complexes. It is time it lived up to such status.

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Ports of Entry

The ports of Los Angeles and Long Beach dominate, but other ports on the West Coast manage to do a brisk business in specialized categories. Shown are each port’s percentage of the West Coast total for containers, cars, general cargo and bulk commodities.

Cargo type Port Autos Containers General Bulk

Long Beach 16.3% 33.6% 17.5% 12.7%

Los Angeles 14.6 33.2 36.3 12.6

Oakland 4.8 11.6 3.0 0

Portland 18.5 2.1 6.4 20.9

San Diego 14.4 0.1 1.9 3.3

Seattle 3.6 10.2 2.5 4.2

Tacoma 10.6 8.8 1.8 11.6

Other ports 17.2 0.04 30.6 34.7

Source: Pacific Maritime Assn.

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Rising in the West

Over two decades, seaborne trade through West Coast ports has quintupled, almost doubling the region’s share of total U.S. trade, in billions of dollars:

Port region 1980 2000

California $41.2 $242.3

Washington 14.2 53.4

Oregon 5.9 13.8

Total U.S. 269.9 739.9

Sources: Census Bureau, Berkeley Roundtable on International Economy

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James Flanigan can be reached at [email protected]