Stirrings of West Coast Competitiveness

The quote below is from the opening statement of a new five-year strategic plan adapted on April 19 by the commissioners of the Port of Los Angeles. It is telling:

“The Port’s container business accounts for more than 80 percent of its revenue and provides thousands of jobs in the region. Maintaining container business is necessary to continue to invest in the future of the Port and serve the community. Approximately 50 percent of the containers that pass through the port are discretionary, meaning they are headed to destinations outside the region, mainly by rail to the Midwest. Future competitive challenges are expected from US West Coast ports that are expanding their facilities, Canadian investments in their ports and railroad infrastructure serving the US Midwest markets and US East Coast ports preparing to attract more cargo after expansion of the Panama Canal in 2014. Protecting and retaining discretionary cargo market share in the face of changing economic conditions and intensifying competition is the key to the future of the Port and the region.

Relevant to this, today I received a call from an industrial real estate executive asking a question increasingly on the minds of anyone connected with international container trade: “What impact, if any, will the Panama Canal expansion have on East Coast port traffic?”

The answer, I think, has as much to do with what happens on the West Coast as what happens on the East Coast. And on the West Coast, the nation’s largest port is saying it intends to protect its market. As I have written before, I believe that Pacific Northwest grain terminals notwithstanding, West Coast labor unrest which caused so much cargo to flee to the East coasts is receding.

Labor, terminals, ports and the Western railroads all understand that competition has come to the West Coast and they will have to work to keep the business they have. I believe a new attitude is taking shape that will ultimately determine the ultimate impact of the Panama Canal widening in 2014.

Contact Peter Tirschwell at Follow him on Twitter @petertirschwell.

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