The ships normally slip in and out of Los Angeles-Long Beach harbors and unload their wares with little incident. Seeing them waiting to bring imports to the port is a visible reminder of California’s dependence on imports and exports.

The longer the ships are at sea, of course, the lower their profits — if they make any profits at all.

The Los Angeles Times reported on another problem:

Sweeping changes in the global shipping industry have upended cargo trade at major U.S. ports. To cut costs, shippers have formed alliances to combine goods from multiple carriers on so-called megaships, some with nearly twice the capacity of traditional commercial vessels. That means each ship takes that much longer to unload.

At the same time, the shipping companies outsourced the management of truck trailers that carry shipping containers around the country. That transition did not go smoothly, by all accounts, creating a logistical nightmare that snarled traffic at Southern California ports long before labor talks broke down.

“In essence, the maritime supply chain has become unhinged,” said Jock O’Connell, an international trade economist with Beacon Economics. “You’ve got some fundamental problems that will take a long time to resolve.”

As CalWatchdog.com has reported, California’s ports now face increasing competition from ports in the U.S. on the Gulf Coast, and with Mexican ports. If the state doesn’t get its act together, it could lose a lot of that business — and thousands of jobs and the tax revenues that go with them.

The City Wire reported the work stoppages may cost the West Coast economy $7 billion and increase meat prices even more.

Members of Congress seem aware of this and are pushing for a resolution. The Los Angeles Times reported:

Bipartisan group of House members on Thursday called for a “swift resolution” of the labor dispute at West Coast ports, warning that the cargo buildup and partial shutdowns were hurting businesses and posed a major risk to the U.S. economy.

“We believe this is the greatest threat our nation faces right now,” said Rep. Kurt Schrader (D-Ore.), who said businesses in his district have laid off workers because goods are not moving through the ports.

He and 15 House colleagues, including Majority Leader Kevin McCarthy (R-Bakersfield), held a news conference highlighting the damage the dispute is causing in their districts.

Gulf Coast

The disruption already is helping Gulf Coast ports grab business that may never return to the West Coast. According to JOC:

Container ship lines are adding calls at Houston to handle U.S. exports and imports whose regular routings to and from Asia have been disrupted by congestion at U.S. West Coast ports.

Houston is set for additional calls by Panamax vessels in the next several weeks, Roger Guenther, the port’s executive director, told JOC.com. He would not identify the carriers but said some are lines that don’t normally call the Texas port.

Ricky Kunz, the port’s vice president of trade development and marketing, said it’s not unusual for Houston to receive eastbound “extra loaders” that carriers add to accommodate customers. “But it’s usually in the peak season, not in February or March,” he said.

“Sweepers” to load U.S. exports are a new development for Houston, and have not been reported at other U.S. ports. Carriers usually add sailings only for the higher-volume eastbound leg of Asia-U.S. routes, not the westbound backhaul.

Mexico

And here’s another development — a possible future one — as reported in the Albuquerque Journal:

Mexico’s announcement this summer of plans for a multibillion-dollar investment by China in a new deep-water port and a railroad that would reach New Mexico’s border could expand international trade in the state exponentially.

Yet the proposed deal is so large – the more than $750 million reportedly planned for the railroad would far outstrip what China has invested in Mexico since 1999 – that it raises questions about its likelihood. At the same time, New Mexico’s buy-in to any cross-border rail plan would be crucial, yet the state has been largely on the sidelines.

New Mexico and its Mexican counterpart, Chihuahua, had been talking for years about the possibility of cross-border cargo rail at the fast-growing Santa Teresa port of entry. But New Mexico still had a call for proposals for a feasibility study when two Mexican governors traveled to Beijing in July and announced an agreement with developer China Hyway Group Ltd. and the China Development Bank. Chihuahua’s El Diario newspaper reported a planned investment of more than $750 million in a rail line and a $1 billion investment over four years in the construction of a deep-water port in the west coast state of Nayarit.

But this time it’s different. A $5.25 billion project is making the Panama Canal wider, making it easier for ships to go directly from Asia to the East Coast of the USA.

And Mexico is completing a $900 million superport at the Port of Lazaro Cardenas. Then there’s the Punta Colonet port in Baja. The Mexican ports then transship their goods inland to the United States.

That means if the West Coast ports charge too much, they just will lose business — and jobs. All those nice, high-paying jobs for the unionized dockworkers could vanish except for a select few.

It’s called competition. Something the monopoly West Coast ports have had little of until now.

California has not fully analyzed the state’s current trade system needs, nor are the port facilities fully coordinated, according to Huntington Beach Assemblyman Travis Allen. Yet continuing legislative efforts to introduce policies may not be addressing the actual needs of our trade infrastructure.

AB 337 by Assemblyman Travis Allen, R-Huntington Beach, requires the Governor’s Office of Business and Economic Development to evaluate key issues affecting trade and foreign investment as part of the development of previously mandated international trade and investment strategy.

Perhaps even more important, AB 337 would require that Go-Biz international trade strategy include an evaluation of the ports of entry to the state, and their capacity for handling international trade originated in or destined for other states.

According to Allen, AB 337 adds additional criteria for the preparation of the international trade and investment strategy.  The bill will add a comprehensive list of business development needs to be considered in preparing the strategy, according to Allen.

AB 337 would require that the State’s International Trade and Investment strategy include a full analysis of the transportation infrastructure and physical capacity to meet the import and export needs of California’s ports of entry, including air, ground, and sea.

“Our ports continuously need to adapt to meet the demands of the rapidly evolving global trade marketplace,” Allen said Monday in the Assembly when presenting AB 337. “This bill sends the message that the Legislature is committed to strengthening California’s economy through one of our strongest and best opportunities for growth and job creation – international trade.”

California trade

In 2012, California exported $162 billion in products to more than 220 foreign countries.  Even with severe economic impacts due to the recession, exports continued to increase in nearly every quarter, through 2012.

“California, the second largest exporter of products in the U.S. and the largest receiver of foreign direct investment in the nation, with the upgrading of the Panama Canal and two new broad-based trade agreements being negotiated and implemented (the Trans-Pacific Partnership and the Transatlantic Trade and Investment Agreement), California goods movement infrastructure will face even greater pressure to perform,” according to bill analysis.

“We depend on California ports to increase international trade, strengthen our state’s economy, and provide good paying jobs,” said Allen.  “Increased competition from other states and countries, coupled with the widening of the Panama Canal in 2015 highlight the need to properly assess the steps our state should take to help our ports succeed.”

California ports handle approximately 45 percent of all the waterborne containerized cargo coming into the United States. Port activities employ more than 500,000 people in California, more than 2,000,000 nationwide and generate an estimated $7,000,000,000 in state and local taxes annually, according to See California.

Allen added: “Due to the amount of jobs and revenue relying on California’s ports, it’s imperative that we support this vital component of our international trade strategy.”