International trade moving through California’s ports is in a state of freefall. Cargo volumes continue to decrease. Car imports are being held at the dock with no place to go. Exports, the last bright spot for California’s trade community, are rapidly disappearing. Waste paper and scrap metal, once shipped to countries like China, were recycled and sent back to the United States in the form of product packaging or finished goods. Now that material is headed for landfills. Just a couple of months ago, agricultural exporters couldn’t find enough containers to ship goods overseas because of excess demand for containers.
In the space of two weeks, one ocean carrier saw 38,000 export bookings evaporate – gone. As a result, highly paid longshore jobs are drying up. Dozens of new container ships sit idle in ports like Singapore – a commercial mothball fleet in the making. One ocean carrier recently announced the layoffs of 1,000 people in their North America operations and the closing of their corporate office in Oakland – ending a presence in California that dates back to the Gold Rush era. And it’s only the beginning and it’s going to get worse.
Economists have documented that global trade and the logistics industry have replaced California’s long lost manufacturing base in terms of providing good paying jobs. California’s ports are major economic engines, providing for hundreds of thousands of trade related jobs and contributing billions of dollars in state and local taxes. All of this is threatened by both the growing global recession and the shifting of cargo and the logistics industry to locations outside of California.
Environmental impact reviews for port infrastructure projects, those on the fast track, take over six years to complete – which does not include the eventual litigation to halt the project. Unfortunately, the State of California lacks the political will to actually build anything – whether it is to support international trade or for the general public. Forget freeways and bridges, we are unable to improve things like schools and universities or develop water storage and delivery systems.
And how are California legislators responding to this threat to California’s global relevance? Besides taking trips to faraway lands during the “special session” of the Legislature – not much. I am reminded of a line from the musical “1776” in which General Washington, in correspondence to the Continental Congress asks “Is anyone there? Does anyone care?”
But California’s ports are also on a separate downward spiral due to events of their own creation. Cargo volumes are down and will continue to decline for the foreseeable future. It would be one thing if it were just external competition and the economy we are battling – but the ports are embroiled in vicious political fights that undermine their ability to build new infrastructure. Our ports also have poor and increasingly strained relationships with their customers and cargo interests. Port commissioners, in particular some in Los Angeles, seem content to sit on the successful investments from a former era; as the management of the Country’s largest seaport they now suffer from a dated commercial arrogance – a misplaced sentiment that our place as a major cargo gateway is secure no matter what the ports do or say to burden trade.
The net effect is that tenants, customers and cargo interests are treated as subjects and serfs rather than partners. That attitude and approach is one that has had negative consequences from a commercial standpoint and been building prior to the current financial crisis.