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Other Ports Prep for Cargo

by Ronald D. White, Times Staff Writer
Los Angeles Times, January 3, 2005

Along the West Coast, expansion programs are in the pipeline
to win shipping business from Southern California

A building boom is underway along the Western seaboard of North America as ports strive to handle the growing flood of trade from China — and possibly lure away some of the shipping that clogged the ports of Los Angeles and Long Beach last year.

Billions of dollars have been committed for dredging and construction projects in Alaska, Canada and up and down the West Coast. Expansion programs are on the drawing boards on the Baja peninsula and at the Panama Canal. Backwater ports in the Bay Area and British Columbia are dreaming of better days.

The activity was inspired in part by the spectacle of cargo-laden ships waiting for days to unload at L.A. and Long Beach — the second time in three years that the nation's busiest port complex has suffered ruinous backlogs. Since July, more than 100 ships have been diverted to Oakland; Manzanillo, Mexico; and other ports to avoid the Southern California traffic jam, and some of the lost business could be permanent as shipping lines look for less congested alternatives.

For Kevin Bruce, director of business development at the port of Anchorage, the epiphany came one evening in September as he flew into Long Beach en route to the annual meeting of the American Assn. of Port Authorities. Looking down, Bruce saw a flotilla of container vessels idling offshore.

"I counted 28 ships and I thought, 'Wow, that's not right,' " Bruce recalled.

Within weeks, Anchorage had hired a New York advertising agency and a batch of red and green greeting cards was in the mail to 50 of the world's largest shipping lines and freight-forwarding companies.

"Don't let the Grinch steal Christmas again," the card said. "There's a reason why Santa works up here."

The seaport nestled at the head of Alaska's Cook Inlet isn't relying only on clever promotions. Anchorage, which says that freight unloaded at its facility can be delivered to the middle of the Lower 48 by truck in three days, is spending $350 million to more than double its berthing spaces and boost its cargo business from 500,000 containers last year to 1 million within two or three years.

It's a familiar story on the Western waterfront.

On Puget Sound in Washington state, the ports of Seattle and Tacoma have embarked on separate expansion programs that will boost their combined capacity from 3.8 million containers in 2004 to between 5.1 million and 5.5 million by 2006. And the ports are counting on Southern California's recent maritime woes to drive business their way.

"The question I'm getting is 'Can you get our goods to Chicago faster than Los Angeles and Long Beach?' " said Jeannie Beckett, senior director of inland transportation for the Port of Tacoma. "We're saying, 'Yes, we can.' "

Oakland, the nation's fourth-busiest container port, has already spent $620 million to build up its capacity and is now looking to use an abandoned Army base to add more. At the same time, it's courting shipping lines to try to redirect cargo from Southern California to the Bay Area.

Smaller communities also are trying to profit from Southern California's problems.

The port of Prince Rupert in British Columbia, in partnership with the provincial government and Canadian National Railroad, will spend 500 million Canadian dollars ($416 million) to convert a small bulk cargo port into a harbor capable of handling 2 million shipping containers a year. The port, about 50 miles south of the Alaskan panhandle, says it has direct access to underused rail capacity that can serve the American Midwest.

"Shippers are looking for alternatives to the traditional gateways in Southern California," said Don Krusel, chief executive of the Prince Rupert Port Authority, "and we are raising our heads at just the right time."

In Pittsburg, an aging industrial city on Suisun Bay northeast of Oakland, officials are annexing waterfront real estate and building hundreds of thousands of feet of warehouse space in hopes of selling the town of 60,000 as an inland deepwater port that can share some of the Bay Area's burgeoning cargo business.

"We are an old industrial city with a lot of empty facilities," said Brad Nail, Pittsburg economic development director, referring to the town's boom-and-bust history as a commercial fishing center and then a coal supplier.

"We have close to 1 million square feet of existing warehouse facilities. By using rail, we could assist with taking containers up here."

Farther south, Mexican officials said talks were underway to transform the relatively small port of Ensenada into a major deepwater facility. The state of Baja California has hired Hong Kong-based Hutchison Port Holdings to perform a feasibility study, although Antonio Rodríguez Hernández, the president of the Baja California House of Deputies' Commission for Economic Development and Port Affairs, said plans to expand Ensenada were still in the conceptual stage.

Expansion projects are also underway at the port of Manzanillo on Mexico's Pacific coast about 150 miles south of Puerto Vallarta and at the Panama Canal.

Shipping companies say they welcome these expansion projects. APL, a major shipping line whose parent company is Singapore-based Neptune Orient Lines Ltd., said it was banking on increased capacity at other West Coast ports to provide an alternative to L.A. and Long Beach. The company also plans to use bigger ships to send more Asian cargo directly to the Eastern United States by way of the Panama Canal, bypassing the West Coast ports altogether.

Los Angeles and Long Beach port officials say they aren't worried about losing significant business or jobs to their growing ranks of competitors. The Southland already has the sea-and-land transportation infrastructure in place, they note, and also boasts a huge local market for imports.

"Roughly half of the cargo that comes here stays here. You are not going to truck it to Southern California from somewhere else," said Keith Higginbotham, a spokesman for the Port of Long Beach. "The rail hubs here are more developed than anywhere else and the nonlocal cargo is attracted here for those reasons."

As if to underscore that importance, the two railroads serving Southern California — Union Pacific Corp. and Burlington Northern Santa Fe Corp. — are racing to lay a second line of track between Los Angeles and Chicago, the nation's busiest corridor for shipping imported freight.

Moreover, some maritime and port development experts are convinced that the U.S. has seriously underestimated the future volume of trade with China, saying that even the expansion plans now on drawing boards up and down the Pacific Ocean's eastern rim might not be enough to handle the traffic.

M. John Vickerman, a principal at transportation consulting firm TranSystems Corp., said his company was involved in the planning for a new port on the Chinese mainland south of Shanghai that, when complete, would be "multiples larger than Los Angeles and Long Beach combined."

Rather than being concerned about losing business, Vickerman said, Los Angeles and Long Beach and other ports should be worried about being overwhelmed by cargo from China, which is expected to increase from 50 million containers annually to 100 million by 2020.

"Every existing U.S. gateway will have to double its capacity by 2020," Vickerman said. "We have a real problem on our hands."

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Ronald D. White, Times Staff Writer
Times staff writers Nancy Cleeland in Los Angeles and Don Lee in Shanghai contributed to this report.
Other Ports Prep for Cargo
Los Angeles Times, January 3, 2005

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