Will City Hall Torpedo the Port of Los Angeles

The Port of Los Angeles is a major economic component of the Southern California economy, responsible, along with Port of Long Beach, for economic activity that supports over 900,000 jobs.  However, the Port has run into strong headwinds as the volume of imported containers has slipped 6% over the last twelve months. Even exports of loaded containers are down 12% this year after almost doubling over the last ten years. These lower volumes, both of which are about 10% below their peak volumes, should serve as a wakeup call to the management of the Port, its Board of politically appointed commissioners, Mayor Eric Garcetti, and the City Council, especially as the competitive environment for international waterborne trade is increasing, eating into the Port’s market share and revenues and the incomes of Southern Californians.

In 2014, the widening of the Panama Canal is scheduled to be completed.  This will allow for the more efficient shipment of containers from Asia to populous markets served by well-run ports on the Gulf and East Coasts.At the same time, ports in Canada, Mexico, and the western USA are aggressively expanding their operations and marketing efforts, targeting retailers, manufacturers, and shippers who are fed up with the high cost Port of Los Angeles and our business unfriendly City. Now is the opportune time for Eric Garcetti, our newly elected mayor, to introduce significant change to the Port of Los Angeles. Importantly, Eric and his advisors need to realize that the salad days of the Port are history.  It is not realistic to expect that the rapid growth of the last twenty years will continue, when the Port’s traffic increased four times, from 2.1 million containers in 1990 to a peak of 8.5 million containers in 2006.

Rather, the Port is in a very competitive business, where efficiency, reliability, and cost are the basis for logistical decisions by beneficial cargo owners and the shipping industry.  Eric and City Hall must also come to the harsh realization that the Port is not the center of the universe, but just a cog in the multifaceted global supply chain. As a first step, Eric should appoint five new commissioners who have industry or logistics experience or the managerial, technical or financial expertise or experience that will allow them to provide valuable guidance to the Port’s management and serve as representatives of the Port to its customers, suppliers, and partners.

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