IMPORT/EXPORT

Southern California Ports Spending Big on Infrastructure to Compete

Cargo-container volumes at the ports of Los Angeles and Long Beach have been on an even keel lately as the economy slowly recovers.

But the Port of Long Beach expects that to change.

At the annual "State of the Port" address on Jan. 31, Port of Long Beach Executive Director J. Christopher Lytle announced that the world's second-largest ocean cargo line, Mediterranean Shipping Co., is doubling its presence on Long Beach's docks.

The Swiss shipping line is purchasing a stake in the leasehold for marine terminal operations at Pier T, the port's largest cargo container. Until the announcement, Pier T was operated principally by Total Terminal International. The new deal gives MSC access to 5,000 feet of berthing space and more than 96,000 feet of rail track.

"MSC already has an interest in Pier A, but this decision makes Long Beach the carrier's West Coast hub, ensuring it will move more cargo through our port," Lytle said.

MSC had been docking its ships at the Port of Los Angeles, but at the end of 2012, it decided to switch to the Port of Long Beach. The news of Mediterranean Shipping's stake in the pier comes weeks after the Port of Long Beach announced that French shipping line CMA CGM, the world's third-largest ocean cargo carrier, had purchased a stake in operating Pier J in Long Beach.

The two new deals mean that Mediterranean Shipping and CMA CGM will make the Port of Long Beach their exclusive gateway in Southern California. Both shipping lines operate megaships that carry more than 12,000 cargo containers at a time. The MSC Beatrice can carry 13,798 containers - over 70 percent more than the typical megaship of a few years ago.

The Port of Long Beach can easily accommodate megaships because of its naturally deep harbor of 50 feet, the depth needed for megaships to sail through.

In addition, the Port of Long Beach broke ground in January to replace the Gerald Desmond Bridge, which connects the city of Long Beach to Terminal Island, where many of the port's piers are located. A new and higher bridge will allow bigger ships to pass under it.

Meanwhile, at the Port of Los Angeles, officials announced in January that they had broken ground on a new rail yard that will enable shippers to transport more containers by trains rather than truck, eliminating 2,300 daily truck trips.

The new rail yard is being funded with $16 million in federal grant money, $51.2 million from the State Proposition 1B Trade Corridors Improvement Fund Grant and $22.1 million from METRO-awarded federal funds. The port is investing $48.37 million from its harbor-revenue funds.

Both ports are trying to stay as competitive as they can as they face more national and international competition from ports vying for more business. When the Panama Canal finishes its expansion project in 2014, many vessels carrying goods from Asia to the East Coast might bypass Southern California's ports and travel an all-water route when a wider canal is able to accommodate larger cargo-container vessels.

Currently, the Panama Canal can only handle ships carrying no more than 4,800 cargo containers. Also, ports in Canada and Mexico are expanding to handle more trans-Pacific cargo that can be shipped by rail or truck to the United States.

Still, the ports of Los Angeles and Long Beach account for a little more than 40 percent of all cargo containers sent from Asia to the United States. In 2012, the Port of Los Angeles processed 8 million cargo containers, up 1.7 percent from the previous year. The port's all-time record was set in 2006, when 8.5 million cargo containers passed through its docks.

The Port of Long Beach saw cargo-container volumes hit 6 million in 2012, down 0.3 percent from the previous year. Its previous high for cargo volume was in 2007, when 7.3 million containers passed through the docks.