Cargo shift threatens Alameda Corridor with financial crisis: report

Cargo shift threatens Alameda Corridor with financial crisis: report

Transloading and drayage have eroded the Alameda Corridor’s share of LA-Long Beach port volumes. Photo: Shutterstock.com.

The Alameda Corridor Transportation Authority (ACTA) faces a “severe financial risk” thanks to a long-term shift in cargo volume away from the ports of Long Beach and Los Angeles, according to a report completed by Mercator for the Pacific Maritime Association (PMA).

Higher container charges, as well as increased automation and efficiency at the San Pedro Bay ports, may be needed to head off a financial crisis for the 20-mile intermodal corridor connecting the largest United States port complex with the Union Pacific Railroad and BNSF Railway in Los Angeles.

The ACTA faces a decline in revenue-generating cargo and a step-up in debt service payments from $122 million a year to $164 million a year in 2024, and to $225 million in 2029. If current trends continue, the ACTA will face significant cash flow deficits in 2024, the PMA warns.

Those deficits could grow from $47 million per year that year to more than $100 million in 2029, and the accumulated shortfall would climb to nearly $1.2 billion by 2038 — even if ACTA raises per-container rates, the PMA report said, and the local ports will be on the hook. 

Total container volume at LA-Long Beach has increased 11 percent over the past 12 years. During the same period, volume increased 41 percent in New York-New Jersey, and 94 percent in the Canadian ports of Vancouver and Prince Rupert, according to port statistics.

The Southern California ports’ share of total US and Canadian volume declined from about 35.4 percent in 2007 to 30.8 percent in 2018, according to American Association of Port Authorities data. The ACTA’s share in LA-Long Beach container volume was only 8.3 percent in 2018.

The ACTA, which opened in 2002, cost approximately $2.4 billion to build and was financed primarily through bonds. The corridor had long-term bond debt and interest exceeding $2.1 billion as of June 2018. The ports, and taxpayers, are ultimately responsible for that debt.

Comments

Everyone on earth knows why shippers shifted their containers to other US ports. "Transloading and Drayage" eroding rail volumes is a laughable excuse at best.