Thursday, April 1, 2010

SoCal Ports' Meeting Cautiously Optimistic About Cargo Recovery

The Port of Long Beach's annual "Pulse of the Ports" event Wednesday offered two predominant points of view: those that see the recent three-month uptick in Southern California port cargo traffic as short term inventory-filling increases and those that believe the increases are signaling a more permanent long-term cargo volume recovery.

Both camps, however, agreed that growth of any kind is good news after suffering through 2009 – a year many are calling the worst in the shipping industry since the advent of containerization.

Joseph Magaddino, chair of the Department of Economics at California State University, Long Beach told the more than 500 attendees that, “While the recession is over, the recovery remains weak.”

One of seven panelists to address the crowd, Magaddino said that the ports of Long Beach and Los Angeles might see some growth in 2010, it will not be enough to counter the number of jobs lost in the sector since the global economic collapse began in late-2007. Magaddino, who said there are more than 300,000 logistics sector employees in the region, pegged the sector job losses at 50,000.

Port of Long Beach Executive Director Richard Steinke pointed out that history has proven that the shipping industry always rebounds and that port officials are "cautiously optimistic about an upward trend.”

"By a lot of estimates, about $20 billion was lost by the ocean carriers," said Steinke, "so as you move to 2010, people are replenishing inventories. Our last three months of volumes at the Port of Long Beach have been up, so there’s a little bit of optimism." He predicted modest growth for the port in 2010.

Speaker Fred Malesa, vice president for international intermodal for BNSF, also saw the recent upturn in volumes as a good sign.

"The prognosis for the patient – the trade sectors – looks pretty good," Malesa said. "It's heading in the right direction. 'Cautious optimism' is a fair description of where we are."

However, panelist Wolfgang Freese, president of Hapag-Lloyd (America), pointed out that the shipping industry is concerned that the three-month uptick is merely a short-term increase as warehouses replenish depleted stocks.

And while praising the advantages of Long Beach/Los Angeles and other West Coast ports, Freese said that cheaper alternatives are available and could mean greater market share loss, especially in Southern California, if expenses passed along by the ports are not addressed.

More encouraging were reports by Peter Peyton, president of the International Longshore and Warehouse Union Local 63, showing that dockers in Southern California are being assigned more work. Peyton said that union casuals, typically the last to receive assignments in the union hierarchy, are now receiving three to four days a week of work – up from two to three days a week at the same time last year.

Peyton's on-the-ground statements were backed up by Frank Capo, vice president of customer service and sales for Total Terminal International who said that vessel volumes in Southern California were increasing, albeit modestly. Last week, the Southern California Marine Exchange, which serves as the air traffic controller for the Southern California ports, also confirmed that vessel calls were up slightly over last year, including calls by container vessels.