Commentary: Ports go better together
The ports of Los Angeles and Long Beach appear locked in the very definition of a zero-sum game.
When one port’s container volume grows, the other contracts. That’s because the organic growth predicted for the two ports only a decade ago has dried up. Whereas once it was forecast that the two ports would handle 20 million or even 30 million TEUs annually, the economic downturn and slow recovery the past five years has drastically reset growth expectations.
The two ports will handle around 15 million TEUs jointly this year — that’s no small amount. Together they are the largest port complex in the Americas, and individually, they are the first and second biggest.
But the question remains, why are they still individual? Why wouldn’t they want to become more than the sum of their parts? The dividing line between the port — separating city of Los Angeles territory from city of Long Beach territory — is more about politics than geography.
In an interview this month with outgoing Port of Los Angeles Executive Director Geraldine Knatz, we posed the question to her: why haven’t the ports merged? She said the idea has long been mooted, but was always shot down for one reason or another. It always seemed to benefit one port more than the other.
Well, here’s a reason — double-digit transpacific container growth isn’t coming back anytime soon. It makes little sense for two ports lying literally next to one another to compete more and more aggressively for that same amount of business.
Ports are profitable entities, both for the labor and economic activity they generate in the local communities, and also because they are largely not fungible. A well-built port next to a major metropolitan area can’t be replaced. But container business in Southern California is fungible because two neighboring cities insist on overseeing a single port complex as two individual entities.
Politicians in Los Angeles and Long Beach would be wise to look at the Port of New York/New Jersey. There, two states have cooperated in lieu of cannibalizing each other’s container business.
The reality has to sink in at some point. It doesn’t make sense to have two sets of administrative staff, two sets of rules, two bodies for container lines and shippers to compare against one other.
That double-digit growth is long gone. The time has come for Los Angeles and Long Beach to be operated as one port, and for the cities to share in the spoils of that more efficient arrangement.
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