PORTS OF LONG BEACH AND L.A. SHOULD BE WORRIED AND RIGHTLY SO
Not only does Southern California face a huge loss of shipping due to the completion in 2014 of widening the Panama Canal, but the long term effects of this recession has all but hammered the last nail into the coffin for the two largest ports in America. Unlike most gurus who have already proclaimed all is quickly being restored to normal, two consulting firms have recently advised both ports the days of handling 15.8 million containers (as they did in 2006) are well and truly over. For months I have been stating that rampant over-consumerism is “finito” because the psyche of Americans has changed. We are actually starting to open savings accounts and throwing away our credit cards. The less we spend will be reflected in the need to import less. Most imports come from Asia and can be and already are classified as unnecessary. Our mindset now is, “I don’t need this junk, and in fact I would rather see the money in my savings account.” Over the past year container volumes into Southern California have slid 25% and all indications are it will continue to decline.
Unfortunately for our industry, international trade is no longer the engine of growth. Globalization and all the nightmares it foisted upon our society will never be the same once we pull ourselves out of this recession. The old saying, “What is good for General Motors is good for America” will be as poignant a statement tomorrow as when it was coined in 1953 by GM’s CEO Charlie Wilson as he was being grilled by Congress for the position of Secretary of Defense. President Obama has stuck firm to his policy that the stimulus plan is about American made goods topping the priority list. Good corporate governance is now about importing jobs back to America, not exporting them.
In spite of all the advice to the contrary, both ports are continuing to spend hundreds of $millions expanding and improving their facilities in the cause of “meeting” their customers’ needs. The one thing I can tell Californians is the shipping lines won’t be parting with a single dime in all this expenditure, the taxpayers will however provide every cent. Just like the airline industry, but more so, 50% of the current vessels afloat or under construction will not be sailing the seven seas for many years to come because international trade will start playing second fiddle to domestic production. It is so sad that men elected to powerful positions can make or break the man in the street’s pocket book. They invariably decide against the good of those they were elected to represent and depart leaving the tax payer holding the baby. The ports of Southern California are already half dead. Even spending money on consultants who end up $millions later telling them the obvious, is a case of throwing good money after bad, let alone continuing with expansion plans in the face of collapsing trade for both ports.
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