For those in the industry who have a Pacific orientation in their business model, maintaining a strong and vital West Coast port infrastructure is a high priority. While the Pacific Northwest and Northern California provide important gateways to key U.S. destinations, Southern California remains the key hub for most shippers. Los Angeles and Long Beach rank first and second in the U.S. in container volume and together rank fifth in the world. They are also quickly earning the reputation of being the most expensive U.S. ports to do business in, with fees proposed or implemented related to infrastructure, trucking, rail movement and the environment.
During a time when international carriers are experiencing tremendous losses and shippers are examining ways to maximize the economies of their supply chain, Southern California, as well as the state of California, is implementing costly initiatives that encourage shippers to explore other routing and sourcing options.
With growth in Mexican and Canadian infrastructure on the horizon and the Panama Canal expansion only five years away, the ports should be focused on ensuring the region remains as competitive and “value-added” as any port on the East or Gulf coast. This effort should encompass improving labor productivity in the ports and offering rail pricing that makes the entire movement of freight through Southern California attractive and cost-effective.
While the recession has had a negative impact on container volume at ports nationwide, the West Coast has experienced the greatest decline, with the biggest drop occurring in Southern California. Shippers are finding new options for discretionary cargo, allowing them to avoid Southern California’s numerous fees and regulatory issues. How can this be slowed or reversed? The answer will require a collaborative effort of all stakeholders involved — ports, carriers, terminal operators, unions, rail operators, truckers and environmental constituencies.
While not easy, it’s essential these parties sit down in earnest and mitigate the costs and complexity of the Southern California transportation system and its impact on shippers’ bottom lines. It’s in everyone’s best interest to ensure the region remain a vitally important international destination port.