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Two-way trade moving through the greater Los Angeles region should grow by more than 14% in 2004 ''despite hurdles,'' says new economic report

LOS ANGELES - 05/06/05 - The total value of two-way global trade moving through the greater Los Angeles region is expected to reach record levels over the next several years despite "some major challenges" that could curb its potential, according to a new study released by the Los Angeles County Economic Development Corp. (LAEDC).

Details of the new report - International Trade Trends & Impacts - were made public earlier this week at the 79th Annual World Trade Week Kickoff Breakfast at the Omni Los Angeles Hotel.

The total value of two-way trade moving through the Los Angeles Customs District should increase this year by 14.3% to just over $302 billion, a new record level, said Jack Kyser, senior economist for the LAEDC who prepared the study.

Another popular measure of trade activity, the total number of containers handled at the ports of Los Angeles and Long Beach, he said, could record a 9.9% gain to 14.4 million TEUs (twenty-foot equivalent units).

The Los Angeles Customs District is the nation's largest, whether measured by trade value or the number of containers handled. The New York/New Jersey district ranks second in both categories.
 
"Other records were also set during 2004, but Southern California's international trade [activity] was disrupted by major congestion problems at the ports of Los Angeles and Long Beach," added Kyser. "Ships were diverted to other ports, and some of these diversions have become permanent."

In 2004, the Los Angeles/Long Beach "load center" lost its third place ranking among the world's ports to very fast growing Shanghai.

The latest figures rank Hong Kong, which handled 22.5 million TEUs last year, as the world's busiest port the busiest port followed by Singapore (21.3 million); Shanghai (14.5 million); and Los Angeles/Long Beach (13.1 million). 

The problems that caused exasperating congestion that clogged the flow of container cargo at both Los Angeles and Long Beach last year - a shortage of dockworkers and rail service problems, mainly - have been addressed, said Kyser.

"However, there is still concern that congestion could flare up again in 2005, especially as more 8,000 TEU ships enter service," he said.

"Many people feel that diversion of ship traffic from Southern California to other ports will solve the congestion problem. However, one has to consider the magnitude of the volumes being handled," said Kyser.

The total increase in loaded containers at Los Angels/Long Beach in 2004 was 788,140 TEUs.

"This," he said, "was more than double the increase at second place New York/New Jersey. The question is whether other ports touted as alternatives to Southern California have the landside infrastructure to handle significantly larger container volumes?"

The question is one that begs for an answer as officials at both San Pedro Bay ports predict container traffic between 2000 and 2020 will quadruple to a staggering 36 million TEUs annually, said Kyser.

One of the key findings of the report was that besides congestion, Southern California's international trade sector has to find ways to deal with several other pressing issues including improving productivity at the ports' container terminals, finding the funds to pay for critical infrastructure projects such as improvements to the chronically congested Long Beach (710) Freeway, and addressing the challenges to future development from the environmental community.
 
According to Kyser, there has been "a major shift" in the image of international trade and its impact on the Southern California economy.

Global commerce, he said, "has gone from the fair-haired child to wearing the proverbial 'black hat.' It's blamed for pollution and congestion, and a growing number of the region's residents would like to either see growth at the ports capped, or worse yet see the ports go away, despite the growth of jobs with good wages."

The leading two-way trading partner for the Los Angeles Customs District in 2004 was China with a total of $85.6 billion, a 25.4% gain from the prior year - a figure that could climb by $6.47 billion if Hong Kong is factored in to the total. Japan came in second with a 2004 total of $43.8 billion, while South Korea ranked a distant third with a trade total of $16.8 billion.

The largest export commodity in value moving out of the local Customs District in 2004 was "electrical apparatus" with a value of $10.9 billion, while the leading import commodity in value coming into the District in 2004 was electronic machinery with a value of $31.0 billion.
 
Data at the state and metro area level on international trade in services is not available, but the report noted that motion picture/TV production and international tourism would both generate large dollar volumes.

Alluding to another study released by the LAEDC earlier this year that concluded that international trade could create more than one million jobs in Southern California over the next 25 years, said Kyser.

International trade in Southern California, he concluded, "set a brisk pace in job creation during 2004, adding 42,600 workers, pushing the annual average employment to 404,600 jobs. This makes international trade the second largest 'basic industry' in the five-counties that comprise the region."

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