Good News and Bad News

In our November 30th commentary, we felt some criticism to be in order because of the indecision and lack of anticipation on the part of LA/Long Beach port officials. We continued on that tack on December 2nd and here’s how we began that commentary:

“Two days ago we mentioned the presence of Hutchison Whampoa Ltd. in three of Mexico’s West Coast container terminal ports. Hutchison positioned itself in those locations because of the inability of LA/Long Beach port officials to overcome the self-imposed obstacles that have had a nasty ripple effect on much of our nation’s distribution chain. Because of the foresight and aggressiveness of Hutchison’s management teams the company has a history of being in the right place at the right time, and its track record proves it.”

We concluded with this observation:

“Relief is in sight, but it isn’t exactly what Californians were hoping for and it will cost the West Coast economy a lot of jobs, a lot of money, and a lot of prestige. It’s never too late to act, of course, but the intransigence of port and terminal officials on the West Coast must be dealt with before any economic threat can be met.”

Now here’s what newspapers around the country dealt with as “Breaking news” early this morning (April 9th):

“LOS ANGELES – A group of shipping companies says it wants to build a $ 1 billion port complex about 150 miles south of Tijuana, Mexico, because of severe congestion at Southern California ports.

“Plans announced Friday by Marine Terminals Corp. include a complex of berths, warehouses and cranes that could handle nearly one-seventh the current volume at the Los Angeles port, or about 1 million standard container units a year, by 2012.

“Company officials hope to connect the proposed Punta Colonet harbor, located on undeveloped farmland, to California with a new rail line. Construction would take at least five years.

“‘We have to get Colonet developed,’ said Walter J. Romanowski, an executive with Marine Terminals, a Los Angeles-based holding company owned by shipping giants Evergreen and Yang Ming of Taiwan, Hanjin of South Korea and China Shipping of Shanghai. ‘There are no other viable West Coast options.’

“The ports of Los Angeles and Long Beach, together the nation’s largest port complex, have become so congested that ships often must wait up to a week before unloading their cargo. Environmental and other restrictions limit expansion, while backups at other West Coast terminals are increasingly common.

“The companies have begun lobbying the Mexican government. If approved, the facility would be one of Mexico’s largest public works projects, requiring the construction of roads, housing, public buildings and other infrastructure where none now exists.

“But company officials claim it would attract enough investment and business to pay for major costs of building the harbor and an accompanying city. By competing with California ports, it could siphon away part of the $ 200 billion in revenue generated each year by shipping through the state.

“Mexican Sen. Hector Osuna Jaime said the port could create jobs and industry in Mexico, which has lost manufacturing jobs in recent years to China. Among the hurdles facing the project are Mexican laws that would bar foreign ownership of the rail line.

“Over the past three decades, Southern California’s twin ports have grown into the country’s main entry port for cargo containers. In 2003, the equivalent of 11.3 million 20-foot containers passed across the docks. Only the ports of Hong Kong and Singapore saw more cargo.”

The bad news is that two new port complexes will be operating on the West Coast of North America and siphoning off a good portion of that $ 200 billion in annual revenue.

The good news, though, is that it’ll take another five years or so before these Mexican facilities will be able to launch much of a challenge, and that should allow time for Los Angeles and Long Beach to deal with their well-known inadequacies.

But the bad news is that north-of-the-border infrastructure improvements and expansion programs have been projected to take as long as ten years to complete, and maybe even as long as fifteen years.

Some more good news resulted, however, when Governor Schwarzenegger returned from his trade mission to Japan and created a task force to look into the business of containerization.

The bad news is that, prior to his departure, the governor had been left in the dark about the chaos in the container ports, and because he took mostly officials in the travel and tourist industry with him he was taken by surprise when he was admonished by Japanese business executives.

The good news, though, is that the port community is likely to get the attention it deserves from those up in Sacramento when those legislators hear about the expansion program.

But the bad news is that the community is not likely to get the money it deserves from those up in Sacramento when those legislators hear about the expansion program’s $ 30 billion dollar price tag.

Some really bad news is that the industry generates some 259,000 jobs locally, according to the Port of Los Angeles website, but a good many of these jobs may be lost in the next five to ten years.

But some really good news is that there will be more jobs available in the Mexican port communities, and the illegal immigration issue may no longer be a major concern in California.