Hardly a murmur is being heard from U.S. port authorities now that economic conditions throughout the industry are so bad. Until recently, the maritime journals, and the local media as well, issued statement after statement from port spokesmen who just loved to carry on. But since that’s no longer the case, we decided to go looking for something to write about. And naturally, our thoughts turned to the twin ports in LA/Long Beach.
As recently as this past March, the “experts” out there were still trying to figure out why there was such a severe downturn in container throughput at those two ports. Those industry leaders cited the accelerated diversion of cargo from the local ports as the reason for the reduction, and blamed increasing levels of regulation and fierce competition for that diversion.
Those leaders went on to say that, as costs escalated in the twin ports, increasingly cost-conscious ocean carriers were choosing cheaper points of entry. Aggressive marketing by competing seaports, the multiple and controversial container fees, and the environmental costs of the Clean Air Action Plan were seen as primary causes behind the unprecedented drop in cargo volumes.
According to one official, the rerouting of so-called “discretionary” cargo away from the twin ports had been driven primarily by shippers looking to cut costs. A survey conducted by the ports had revealed that tens of thousands of containers normally handled locally were being directed instead to ports in Canada, Washington, and even to ports on the East and Gulf coasts.
At least they were correct about container fee add-ons. In February of this year both ports adopted a $ 70 fee on each 40-foot container moved by truck in order to pay for the turnover of older, polluting trucks operating at the ports. That fee came on top of a $ 100 PierPass fee added to each 40-footer moved during peak operating hours. That PierPass fee was imposed in 2005, and a number of analysts have felt that such a fee/fine would eventually bring about a “tipping point”.
Port authorities said they were addressing diversion (the “tipping point”?) by offering 10 percent rebates on per-container costs for cargo moved into or out of California. They also reduced dockage fees, they said, and cited the numerous roadway improvements that were being planned to ease traffic congestion.
According to officials, in order to improve efficiency the ports also planned to spend somewhere in the neighborhood of $ 2 billion to replace bridges and modernize terminals.
The smog must have been real bad out there. Not one of those “experts” saw that diversions, fees and environmental regulations had nothing to do with the unprecedented downturns in cargo volumes. Something else had taken place on the planet over the last half-dozen years or so, and the only thing that had been diverted was their attention.
“It’s the economy, stupid!”, somebody shoulda said.