Facing up to falling volumes
Marking a major milestone, the dredging of the main channel and a turning basin for oil tankers has been finished at the Port of Long Beach. Credit: Port of Long Beach
Despite rocky times, the Los Angeles and Long Beach box trade dominance will continue. Martin Rushmere reports
Port officials blame much of the decline on the switch by California United Terminals, which accounted for about 10% of traffic, to Los Angeles next door. However, the move happened 10 months ago and industry insiders see the explanation as more of an excuse. They say that the real reason is the rickety US economy and that more depressing news is on the way.
Los Angeles acknowledges this. Says a port official: "We are beginning our planning for the coming fiscal year (which starts July 1). And we are also going back into our current budget and looking to trim back expenses where we can due to slower than expected cargo volumes. We are aware of the volume forecasts and are budgeting conservatively for the future. So yes, we are taking the volume trends/downturn into account and budgeting accordingly."
To add to Long Beach's difficulties, it is grappling with a problem hightlighted by economist Paul Bingham of lengthy preparations for new projects, in the form of its Pier S. Designed to handle nearly 2m teu a year, the $650m terminal was proposed 10 years ago but has been delayed repeatedly – and now another three months has been added for public comments. With environmental reports still to be considered (at least about 1,000 pages), work will only finish in three years.
One piece of good news is that dredging of the main channel and a turning basin for oil tankers has been finished, marking a major milestone in an ongoing $40m project by the Port and the US Army Corps of Engineers to improve navigation and the environment in the harbour. The dredging will provide a minimum depth of 23.2 metres from two miles outside the harbour entrance at Queens Gate to the Middle Harbor and East Basin serving the crude oil terminal on Pier T.
About $35m of the total of $40m cost came from the port, plus $2.6m from the Army Corps of Engineers and $2.4m in federal economic stimulus funds. The Army Corps has also been providing project construction management.
And falling volumes will unlikely dent the dominance of Los Angeles and Long Beach as the main gateways for US container traffic, a tag that will undoubtedly stick for at least the next five years: their 40% share of US traffic is not seen as coming under any serious threat from the Panama Canal unless costs and economic conditions change dramatically.
Building on this dominance and despite rocky business conditions, Long Beach and LA are sticking to their campaign to be the world leaders in cutting down pollution. Next year, Los Angeles will start testing a $2m seawater scrubber system that reduces Sox and Nox gases, which will help meet IMO standards. Rolls Royce Marine, a ship technology design and manufacturing firm, will integrate and test a seawater scrubber system made by the Dupont subsidiary BELCO.
Long Beach has just finished its own project in its eco-orientated campaign. Pier C, operated by SSA Terminals and Matson Navigation, is the fourth terminal to be equipped with shoreside power (cold ironing). California law requires ports to supply shoreside power to half of all container ship calls from 2014.
Meanwhile, Los Angeles has been freed from a potentially costly legal headache. The governing city council has withdrawn support for a proposal to reopen a disused shipyard that has been earmarked as a site for dredging soil. Gambol shipyard's backers claimed that the project would bring in hundreds of millions of dollars and create thousands of jobs – but independent assessments said this would be highly unlikely.
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